I believe as a director, James H. Beatty owed a duty to the company to act in its best interest and avoid conflicts of interest. However, as a shareholder, he did not have that duty.
I don’t think that the shareholder vote necessarily relived him of that duty. Instead, it was his absence at the directors meeting that approved the transaction that negated that duty. The shareholders vote to ratify the directors meeting decision was allowed and not seen as a breach of duty because in that situation he was wearing his shareholders hat and not his directors hat. As stated on the course website “a shareholder’s vote is not disqualified by a private interest being at stake”.
I am not sure if North-West Transportation Co. could have maintained contract with James H. Beatty and also sue to recover any profit he benefitted from as a result of the transaction? I am thinking not… I do not believe that this was oppressive to other shareholders nor was it a directors’ breach of the corporation’s rights. It was substantially admitted that the steamer was essential to the efficient conduct of the companies business and the steamer was well adapted to the business and the money that was paid for the steamer was not excessive nor unreasonable.
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