First Class revision notes on Company law for the LLB, based on Durham University lectures. These notes contain lots of 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 ...
2. DIRECTORS, SHAREHOLDERS AND THE
BALANCE OF POWER
What is a Director:
De jure director: someone who has been formally appointed as a director
De facto director: s250 Companies Act 2006: “Director includes any person
occupying the position of a director, by whatever name called.” This spreads the net
widely to try and catch all the different groups.
o Re Gemma: Must attend board meetings and perform the normal functions
o S250 means that de facto directors are the same as de jure directors
Shadow director: s251 CA 2006: A person in accordance with those directions or
instructions the directors of the company are accustomed to act
o Will not turn up to board meetings
o Offer advice that is taken in to account: s251(2)(a) CA
o Ultraframe: must tell the governing majority what to do
o Liability depends on whether a statute extends to them, for example wrongful
trading does: s214(7) CA
o General duties of directors apply to shadows to the same extend they are
capable of applying to shadows: s270(5) IA 1986
Dixon: Mills v Mills: Directors act as an agent of the company as well as having
fiduciary duties
Directors’ powers:
Articles 3 and 4 of the Model Articles of Association are the most important as they
deal with the balance of powers
Model Article 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
Shareholders’ powers:
These powers operate as exceptions to the powers of the directors
S168 Companies Act 2006: SH has the power to remove Directors by ordinary
resolution1
o This is the ultimate control and sanction that the SH have
o This section makes it easy to use this ultimate power
o Simply majority has set the bar low for SH
Model Article 17 (private companies), Article 20 (public companies): SH have the
power to appoint Directors
Generally have a power to interfere and tell Directors what to do
1
Ordinary resolution: anything over 50% (simple majority). Special resolution: over 75%
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