What standards apply to group instructions? And is it possible to obtain any benefit for the group by violating the law or a contract?
Abstract
When giving instructions to the business management of a controlled company, the controlling entity is obligated to proceed with due and diligent care. In a group of companies, this standard of care has its specifics consisting in necessary knowledge and diligence.
Controlling instructions may be given only within the framework of law. The influence of the controlling entity directing the controlled company towards violation of objective law does not constitute an instruction within the meaning of Section 81(1) of the Business Corporations Act but affection pursuant to Section 71 thereof.
On the other hand, an instruction resulting in a breach of a contractual obligation with respect to a non-group party is not always impermissible and therefore unbinding. The corrective permitting such instructions are good manners in their widest correlation.
Likewise, the non-fulfilment of duties by the controlled company arising from employment, consumer, or public contracts is beyond the competence of group control. Accordingly, the non-fulfilment of a contract cannot be deemed as conduct apparently abusing the group's economic status.