What does the term "diversion of a company's business" refer to?

The term "diversion of a company's business" primarily refers to the scenario where business activities or resources are redirected or transferred to an entity that is controlled by a director, thereby potentially affecting the original company's operations and interests. This can happen when a director utilizes their influence or position to channel business away from the company they serve, possibly toward a business they own or have an interest in. This practice raises concerns regarding conflict of interest, fiduciary duties, and can lead to issues of self-dealing.

In contrast, the other options do not capture this concept accurately. Acquiring a new subsidiary is about expansion rather than diversion, focusing on diverse product lines pertains to broadening offerings without implying a redirection of resources, and conducting operations outside company premises relates to logistics and is not inherently about the diversion of business interests or activities. Thus, the choice that describes the transfer of business activities to a director-controlled entity best encapsulates the meaning of the term within a business law context.