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< Park he-9780198856726-chapter-5
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S. Directors’ Duties
Percival v Wright ftgo. 2 Ch y2r established that directors do not owe duties to shareholders directly, whether individually or collectively. In rare cases directors may owe duties directly to shareholders: where they act as the shareholder’s agent (Allen v Hyatt 6g,, TLR .) or where the nature of therempany and director—shareholder relationship is such that directors have taken on direct responsibilities to shareholders (Coleman yMyerstr5Tz)a NZLR 2z5; Re Chez N. (Restaurants) Ltd (1994 BCLC th2). In NAM v Anderson boot II BCLC372, former members claimed directors had owed them a duty to disclose details of a pending sale. The court confirmed a director’s duty is to the company alone, other than in special relationships where directors are In ‘direct and close contact’ with shareholders. This position is not changed by CA zoo6, s. 172, and Sharp v Blank I.2w7fBCC ,87 .d Vold Nielsen Holding A/S vBaldorino (2.9.1 EWHC 1926 (Coco. have recently reiterated that duties arise only where there was some personal relationship or particular dealing between the shareholders and directors,
z, Show that you’ve thought about whether the position remains the…and are therefore reflecting on the question
Duties are thus owed to the company alone save in rare cases. But this does not mean the interests of others are Irrelevant. Section 172(1) requires directors, in relfill.g the duty to promote success of the company for the benefit of its members, to have regard (‘amongst other matters’) to a list Of facro, (paragraphs (a)—(0) which includes the interests of the company’s employees; the need to foster business relationships.), suppliers, customers, and others; and the impact on the community and the environment. However, this is a long way from directors owing a duty to any stakeholder or other interest listed; the duty is .11 to the company alone. It is akin to the former Companies Act 1585, s. 3o9,s which required directors to have regard to employees’ interests, while leaving the duty owed to the company itself.
5 It can be difficult to Mow.. Mr you should set out statutory material in an ans.. Here you do need to establish the law, but it is …better to summarize the key elements than simply copy out from a statute book
6 Not an essential point but it Indicates some awareness of the pre-2oo6 position
The approach of s. 152 was labelled ‘enlightened shareholder value’ (ES, by the Company Law Review. It is fundamentally. ‘shareholder primacy’ approach in that companies should be run for the benefit of their members, rather than a ‘stakeholder’ or `pluralist’ approach (for the benefit all
Suasniter: Queen Nary university of rorgpn; tlate: r3 Apra 1013
s. Directors’ Duties
those with a stake. the business). ESV recognizes taking other interests into account ren enhance the success of the company which will benefit shareholders, but under ESV these factors are relevant m far as they achieve that aim; they are not pursued for their own merits. It is for the directors’ Judgment how far those factors are relevant, if at all, . promoting the company’s success for the members’ benefit. Lynch thus argues s. 172 makes no meaningful difference (‘.t.a rza, a ground-breaking reform of directors’ duties, or the Emperor’s New Clothes, (mu) 33 Co I…196)w. a study of FTSE too companies concluded ESV has had little