THE
CORPORATE
CODES
The External Legal Advice Dispute
During the course of his internal investigations into Cytech, Frangos encountered resistance from Liebesman, the CEO, and the executives. After he saw that the board were not taking appropriate action, Frangos sought external legal counsel to determine an appropriate course of action to remedy what he saw as the excesses of management. The board of directors objected strongly to the action taken by Frangos, raising the question as to whether or not directors were entitled to seek external counsel. A judge of the High Court gave an opinion supporting the actions of Frangos, and it is accepted generally that this is a constitutional right that directors have.