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Compaq had arranged to engage Personal Automation Mart for its "GEMS" project. However, an internal dispute arose between Tan - Compaq's managing director - and the majority shareholder. This dispute prompted Tan to resign, and she brought along some of the Compaq's employees who assisted in the GEMS project to set up another company Newstead. Personal Automation Mart later transferred the project to Newstead. The court held that Tan breached her fiduciary duties by setting up a competing firm to take advantage of a contract that should have gone to the company.
The above case also leads one to ponder, since directors are not allowed to take corporate opportunities without the permission of the company, can the director resign from the company to take up a corporate opportunity? Will his liability be absolved then?
The courts have held that when directors resign from a company to take up a corporate opportunity, he will breach his duty by taking up the opportunity without the permission of the company where:
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