Directors Duties

Directors Duties

1. Common Law Duties

   • incorporated by s170
   • not take unauthorised advanatge of position
     • Commonwealth Oil v Baxter
       • secretly set up business
     • IDC Ltd v Cooley
       • Resigned and went to Gas Board
   • act in the best interests of the company
     • Item Software v Fassihi
       • undermined company
     • Guiness v Saunders
       • Directors swindelling secret profit
         • £5.2m
   • transactions for proper purpose
   • division between compnay/his assets
   • company info confidential

2. General Duties

   • Act within powers
     • s171
     • ultra vires rule
       • s9 ECA
     • Howard Simth v Ampol Petroleum
       • maj > min no permission
   • Promote sucess, but have regard to
     • s172
     • Long term consequences
     • employees
     • suppliers, cutomers
     • reputation
     • fairness to members
       • Parks of Hamilton v Campbell
         • treated himself preferential shareholder
       • Hughes v Weiss
         • extracted money without telling shareholders
     • kindness
     • Only company can sue
     • member may make derivative claim
       • s265
       • On behalf of company
   • Independent Judgement
     • 173
     • Dawson v Coats Paton
       • Changed mind about merger
         • Allowed
       • Share price slipped
   • Reasonable Skill
     • s174
     • Dorchester Finance
       • Pre signed cheques
     • D'Jan of London
       • Invalid insurance
     • Lexi Holdings
       • No action against fraud
   • Avoid Conflicts of Interest
     • s175
     • West Coast Capital
       • Dobbies Case
     • s180
       • members can ratify
   • No benefits from 3rd parties
     • s176
   • Declare interests
     • unless
       • not likely to be a conflict
       • directors/member aware
       • has already been considered
     • s177

3. Members Approval

   • 1 sided sevice contracts +2 years
     • s188
   • Substantial Property transations
     • s190
     • 10% net assets + £500
     • +£100,00
   • Loan +£10,000
     • s207(1)
   • Credit transactions
     • Private
       • +£15,000
         • s207(2)
     • Plc?
       • all
         • s198
   • Payment for loss of office
     • s215

4. Ratification of Acts

   • s239
   • Regal (Hastings) v Gulliver
     • sold shares to commercial opportunity
       • no ratification
         • new holder sued

5. Duty to creditors

   • Multinational Gas
   • Winwork v Edward Baron
     • husband/wife case
   • Wrongful trading
     • IA s 214
     • duty towards insolvency
   • Involuntary
     • Williams v Natural Life
       • Negligent. Not liable
     • Standard Bank v Pakistan Shipping
       • Fraud. Liable.
     • Daido Asia
       • Tea bag fraud case. Liable

6. Honest and Reasonable excuse

   • s1157
   • Cohen v Selby
     • Diamond swindelling not honest and reasonable
   • D'Jan of London