Parent Company v. Subsidiary Board Member: Authority of Group Management over Subsidiary Directors

A former manager and subsequently elected board member of a subsidiary company was sued for damages by the parent company for entering into a real estate contract without approval from the group management, which claimed a hierarchical structure granted it the authority to issue binding directives to subsidiary board members. The court ruled that a subsidiary's board member primarily owes a duty to protect the interests of the subsidiary, and absent a specific contractual obligation, they are not legally bound by instructions from the group management, nor could the board chairman issue binding instructions to a fellow board member, meaning the basis for the damages claim failed.