In Sharma v Sharma [2013] EWCA Civ 1287, the English Court of Appeal considered the defence of fully informed consent in the context of a claim that a company director had breached her duty to act in the best interests of the company.  In this case, a director acquired several dental practices for her own benefit.  Two company shareholders were aware of this and remained silent on the issue.  The issue of breach of director's duty came before the Court of Appeal, which held (amongst other things) that:

  • A company director breaches their duty if, for their personal gain, they exploit opportunities which came to their attention through their role as director or any other opportunities which they could and should exploit for the benefit of the company
  • When a shareholder, with full knowledge of the relevant facts (which need not extend to them appreciating that the proposed action constitutes a breach of duty), consents to a director exploiting an opportunity for personal gain, then that conduct by the director does not constitute a breach of that director's duty
  • A shareholder's acquiescence to the director's proposed conduct, when he has full knowledge of the relevant facts, may constitute consent.  However, consent cannot be inferred from silence unless the shareholder knows his consent is required or the circumstances are such that it would be unconscionable for the shareholder to remain silent at the time and object afterwards.

On the facts of the case it was held that the shareholders' silence did amount to fully informed consent.

See Court decision here.