Other
LPC - BLP MODULE - CONTROLS ON DIRECTORS (DISTINCTION)
- Course
- Institution
Notes on the controls imposed on directors of companies
[Show more]
Seller
Follow
ssargeant35
Reviews received
Content preview
BLPControls on Directors.
Directors General Duties.
The directors of a company have duties imposed on them by law.
o These duties seek to hold the directors to account for the way in which they run the
company.
o They seek to protect the company by regulating the director’s behaviour.
o If any of the directors breaches any of these duties then he will incur liability and
action may be taken against him.
Before the CA 1006 directors were subject to duties which derived principally from equitable
principles but also from common law rules.
o The duties of directors therefore evolved through decisions of the courts.
o the courts have long held directors to be in a fiduciary relationship with their
company and to owe it fiduciary duties.
o The have considered directors to be analogous to trustees, namely, in a special
position of trust in relation to their company.
o The fiduciary duties imposed on directors therefore arose out of equitable
principles.
o Directors were also subject to the common law duty of skill and care.
The previous equitable and common law duties were codified and reformed in sections 171-
181 of the Act.
o Seven separate general duties are set out in sections 171 to 177.
o The new duties have replaced the previous duties – section 170(3).
o The new duties will be interpreted in accordance with the previous case law on
directors duties (section 170(4)).
Who owes the duties?
o The duties apply to all directors of the company.
o Director is defined by section 250(1).
o The duties apply to all directors, even shadow directors.
To whom are the duties owed?
o Directors owe their duties to the company – section 170(1).
Not to the shareholders, creditors or other directors.
This means that the company itself must take action against a director for
breach of these duties.
In limited cases the shareholders may bring a derivative action on behalf of
the company.
Duty to act within powers.
Section 171
General duty that is a codification of the fiduciary duty that a director must use his powers
for a proper purpose, and must act within the powers conferred by the company’s
memorandum and articles of association/
The duty will be breached if a director acts outside of the powers given in the articles.
(section 17).
Duty to promote the success of the company.
Most important duty
Section 172
Based primarily on the previous fiduciary duty to act in good faith in the best interests of the
company
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 ssargeant35. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.89. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now