One of the Directors of a property maintenance company has a piece of land for sale and the company would like to buy it from him. The land is thought to be worth between $80,000 and $100,000. Can they just make an offer for it?

Question

Thanks for your help!

Answer 1

I am not a lawyer, but have an opinion that may be pertinent to this question. The purchase of a property from a mamber of the Board of a company, by the making and accepting of an offer, is a transaction in which a conflict of interest may exist. There is a strong possibility that the property will be sold at more than the true market value, thus enriching the Director by an excessive amount at the expense of shareholders. See
http://en.wikipedia.org/wiki/Conflict_of_interest
It may help if the value of the property is first accurately established by at least two independent appraisers and the owner-Director recuses himself or herself from the decision to make the offer.

Answer 2

thank you very much, this is very helpful!