Revision notes on directors duties in Company Law.
Includes statutory provisions accompanied by and explanation of key cases.
These notes were used for final year LLB Law studies in which I achieved a mark of 70% for Company Law.
Directors Duties
Who is a Director?
• CA 2006 S250 – ‘director includes any person occupying the position of
director, by whatever name called
• The definition of director relates to an individual with direct control over the
day-to-day management of the company
• De facto directors – a person who acts in the role of director without ever
having been formally appointed as such
• Shadow directors – persons on whose directions or instructions the company
is accustomed to act (CA 2006 251)
• Model articles (3) – directors’ general authority – subject to the articles, the
directors are responsible for the management of the company’s business, for
which purpose they may exercise all the powers of the company
• Gemma Ltd v Davies [2008] – G was the director of a building business and
his wife was the company secretary. As part of the claim against the
company, the court was required to consider whether liability should be
extended to the wife as a de facto director of the company
Held – the test to be applied in deciding whether a person was a shadow or
de facto director were…
(a) whether they undertook functions in relation to the company which could
be discharged only by a director
(b) whether they participated in directing the affairs of the company on an
equal footing and not in a subordinate role
(c) and whether they assumed the status and functions of a company director
Appointment of Directors
• CA 2006 s154 – a private limited company must have at least one director
and a public limited company must have at least two
• CA 2006 s162 also requires the company to maintain a register of directors
• The procedure for appointment of directors is usually contained in the articles
of association
• Model articles 17(1) any person who is willing to act as a director, and is
permitted by law to do so, may be appointed to be a director –
(a) By ordinary resolution, or
(b) By a decision of the directors
• Directors can be removed at any time by ordinary resolution (majority of votes
cast) under CA 2006 s168
Directors Duties
• Key director’s duties are governed by CA 2006 –
(a) S171 – duty to act within powers
(b) S172 – duty to promote the success of the company
(c) S173 – duty to exercise independent judgement
(d) S174 – duty to exercise reasonable care, skill, and diligence
(e) S175 – duty to avoid conflict of interest
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller DanniiW. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.86. You're not tied to anything after your purchase.
