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Director's Duties
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  • Course
  • Company Law
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  • Durham University (DUT)
  • Book
  • Company Law

First Class revision notes on Company law for the LLB, based on Durham University lectures. These notes contain over 50 academic references, cases and judge commentary, laid out on an easy-to-flow structure, a step-by-step guide and clear examples. Having these notes to hand will radically shorten ...

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  • July 4, 2021
  • 11
  • 2020/2021
  • Other
  • Unknown

Subjects

  • directors
  • duties
  • company
  • law
  • company law
  • directors duties
  • company act

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  • Durham University (DUT)
  • Durham University
  • Company Law
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LAW CASES STATUE PERSON EXTRA



3. DIRECTORS’ GENERAL DUTIES
Codification of duties:
 General duties now appear in Part 10 of the 2006 Act
 Originally developed by the courts: ‘duty of care and skill’ for directors: Bristol and
west Building Society v Mothew 1996
 Department of Trade and Industry, “Company Law Reform” Commission 6456 2005:
It was hoped that the code would “make the law in this area more consistent,
accessible and comprehensible” to people in businesses.
 Changes requested by Company Law Review: based on objectives of maximising
clarity and accessibility they recommended that the duties of the D should be codified
by the way of statutory restatement
 Andrew Keay: It could be argued that we have moved from a statue and case law
amalgam to a largely codified system of law.
o It might be hoped that the Companies Act 2006 has taken us away from this
need to continually tinker and update.
o The company code is now comprehensive and encompassing

To whom do D owe their duties:
 s170(1) CA 2006: a director, who is subject to the “general duties” set out in s171-77,
owes these duties “to the company”.
o This enshrined the principle stemming from Percival v Wright 1902 which
held that the directors of a company owed fiduciary duties not to the SH, but
to the company.
o S170(3): General duties are based on common law rules and equitable
principles
o Gowling WLG 2009 article on lexology: the old common law rules remain
intact and have continuing relevance
o s170 (4) CA 2006: Scope and nature of the general duties will be interpreted
and applied in the same way as the common law
o Swinfen Eady J stressed that to hold otherwise would place directors in a most
invidious position, as they could not buy or sell shares without disclosing
negotiations, a premature disclosure of which might well be against the best
interest of the company
o This rational was explained by Lord Cullen in Dawson International v Coats:
the directors are not normally the agents of the current SH, they have but one
master, the company.
o Parker Hood: this statutory statement is to be welcomed
 A breach of duty is therefore a wrong done to the company and the proper claimant in
proceedings in respect of the breach is the company itself: as set out in Foss v
Harbottle 1843 and Part 11 CA 2006; Chapter 10
Page 1 of 11

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