Directors Duties

Directors Duties

Common Law Duties
1. incorporated by s170
2. not take unauthorised advanatge of position
  1. Commonwealth Oil v Baxter
    1. secretly set up business
  2. IDC Ltd v Cooley
    1. Resigned and went to Gas Board
3. act in the best interests of the company
  1. Item Software v Fassihi
    1. undermined company
  2. Guiness v Saunders
    1. Directors swindelling secret profit
      1. £5.2m
4. transactions for proper purpose
5. division between compnay/his assets
6. company info confidential
General Duties
1. Act within powers
  1. s171
  2. ultra vires rule
    1. s9 ECA
  3. Howard Simth v Ampol Petroleum
    1. maj > min no permission
2. Promote sucess, but have regard to
  1. s172
  2. Long term consequences
  3. employees
  4. suppliers, cutomers
  5. reputation
  6. fairness to members
    1. Parks of Hamilton v Campbell
      1. treated himself preferential shareholder
    2. Hughes v Weiss
      1. extracted money without telling shareholders
  7. kindness
  8. Only company can sue
  9. member may make derivative claim
    1. s265
    2. On behalf of company
3. Independent Judgement
  1. 173
  2. Dawson v Coats Paton
    1. Changed mind about merger
      1. Allowed
    2. Share price slipped
4. Reasonable Skill
  1. s174
  2. Dorchester Finance
    1. Pre signed cheques
  3. D'Jan of London
    1. Invalid insurance
  4. Lexi Holdings
    1. No action against fraud
5. Avoid Conflicts of Interest
  1. s175
  2. West Coast Capital
    1. Dobbies Case
  3. s180
    1. members can ratify
6. No benefits from 3rd parties
  1. s176
7. Declare interests
  1. unless
    1. not likely to be a conflict
    2. directors/member aware
    3. has already been considered
  2. s177
Members Approval
1. 1 sided sevice contracts +2 years
  1. s188
2. Substantial Property transations
  1. s190
  2. 10% net assets + £500
  3. +£100,00
3. Loan +£10,000
  1. s207(1)
4. Credit transactions
  1. Private
    1. +£15,000
      1. s207(2)
  2. Plc?
    1. all
      1. s198
5. Payment for loss of office
  1. s215
Ratification of Acts
1. s239
2. Regal (Hastings) v Gulliver
  1. sold shares to commercial opportunity
    1. no ratification
      1. new holder sued
Duty to creditors
1. Multinational Gas
2. Winwork v Edward Baron
  1. husband/wife case
3. Wrongful trading
  1. IA s 214
  2. duty towards insolvency
4. Involuntary
  1. Williams v Natural Life
    1. Negligent. Not liable
  2. Standard Bank v Pakistan Shipping
    1. Fraud. Liable.
  3. Daido Asia
    1. Tea bag fraud case. Liable
Honest and Reasonable excuse
1. s1157
2. Cohen v Selby
  1. Diamond swindelling not honest and reasonable
3. D'Jan of London

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