ET-China.com International Holdings [2019] NSWSC 1874

"Transfer the shares so we can solve this the Chinese way!"

___ 

Without telling the rest of the board, and without payment beforehand, 2 of a Co’s directors transferred some of the Co’s shares to an entity owned by an influential person in China.  

The idea was to allow the Co to solve its problems “the Chinese way”: [96]   

The transfer gave the "optics" that the influential person had control: [258]  

The problems included Chinese State Authorities getting judgments against the Co, with any appeal “futile”: [344], [360]  

Ultimately, the judgments led the influential person to agree to a price of $2m (having previously entertained $13m): [350]  

The $2m saw some funds returned to shareholders and to meet the Co’s obligations, with no benefit to the 2 directors: [441]  The directors did not breach their duties: [466] and [545]  The transfer of shares was not beneficial; not a gift: [484] to [487], [508]   

The transfer was for appearances, to allow the influential person to exert her influence and not improperly benefit her: [520], [530]  

The directors’ failure to consult the board was a breach of duty, but not severe enough to impose liability: [528]