Assume that Scipio Ltd has a controlling interest in Africanus Ltd.As a result of this relationship:
A) The directors of Africanus Ltd have a fiduciary duty to act in the best interests of Scipio Ltd.
B) Because of its controlling interest in Africanus Ltd, Scipio Ltd will take over the management of Africanus Ltd from the Board of that company.
C) The Board of Africanus Ltd will be dissolved as they no longer have any real power in Africanus Ltd.
D) None of the above.

Question

Quizplus · Accepted Answer

None of the statements are correct. Having a controlling interest in a company does not necessarily mean that the controlling company takes over the management of the other company or that the board of the company being controlled is dissolved. The directors of Africanus Ltd still have a fiduciary duty to act in the best interests of Africanus Ltd and its shareholders.

Assume That Scipio Ltd Has a Controlling Interest in Africanus