14 pages of consolidated notes on directors duties, authority and liability with expectations and consequences of breaching. Notes of how directors can avoid liability for transactions. Substantial property Transactions (SPTs), loans to directors and payment for loss of office also covered as well ...
Directors Duties and Directors Transactions – Notes
Ch 6, pg120
Directors powers…
Art 3 MA – directors are responsible for the management of the company and can exercise
all the company’s powers (similar provision in art 70 Table A).
Art 7 MA – general rule as to decision-making by directors is that it may be done by majority
decision at a board meeting.
Art 8 MA – where the board can exercise their powers unanimously without a board
meeting being held, so long as all directors indicate to one another that they share a
common view on a matter.
If shareholders do not agree with director’s decisions…
Art 4 – power to direct the directors what to do by special resolution (art 70 Table A), which
has supremacy over Art 3.
s21 CA 2006 – shareholders may change the articles by special resolution (in order to take
certain powers from the board).
s168(1) CA 2006 – shareholders can remove directors by ordinary resolution.
Delegation of powers…
Requiring the whole board to convene and agree every decision is unnecessarily restrictive,
inefficient and burdensome.
Art 5 (wide flexible terms to delegate to specific directors or then delegate even further)–
allows the directors as a board to decide to delegate any of their powers:
(a) to such person or committee;
(b) by such means;
(c) to such an extent;
(d) in relation to such matters; and
(e) on such terms;
as they think fit (art 72 Table A).
Director’s Authority
Director is agent of company and can bind company in a contractual relationship with a third party.
Two types of authority:
actual authority, and
o The company gives the director specific prior consent to actions.
o May be express or implied.
apparent authority.
o Director acts without company’s prior consent but still binds the company in
contract to third party – company is estopped from denying directors authority.
o Based on representation, by words or conduct to the third party by the company
that the person in question is acting with the company’s authority. Cannot arise
from the person own actions.
Director’s Liability
Directors are not liable for contracts made by the directors in the company’s name on behalf of the
company unless:
Exceeding actual authority:
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 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 msellex. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £7.49. You're not tied to anything after your purchase.
