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s. Directors’ Duties
Suggested Answer
Companies Act 2.6 (CA wo6), 8.17o(t) states that a director owes his general duties (.M1, to the company… nominee dote… owe their duties to the company’ rather than the person appointing them (Hawk. vCoddy Dom, a BCLC on).
Nominee directors are an Interesting group when it comes to directors’ duties, but there Is too much else to fit Into this particular essay to explore this further
CA aoo6, s. tyo(t) confirms the approach taken at common law prior to codification of directors’ duties in the (following the Company law Review) but does not elaborate. the meaning of ‘the company’ in this context. The company is both a separate entity (Salomon v A. Solomon & Co Ltd 1.97)AC 22) and an association of its members, while relying and impacting on myriad other stakeholders, from employees to the environment. This essay will explore whether a director owes duties only to the company and what this means, considering the impact of CA 2.6, s..2 in this
2 Having established the very .sic points of law that underpin the Issues, it is sensible to link explicitly to the question
At common law directors had to act bona fide in what they considered to be the interests of the company (Re Smith Or Fawcett Ltd fioa, Ch 304); the interests of the company were the interests of the shareholders as a general body (caiman v Notional Association forAlental Health fre7G Ch Ina slight change,’ s. in requires a director to ‘act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as …hole’. This is the fundamental duty to which directors are subject: Rem Software (UK, Ltd v Fossihi /2.41 EWCA Ova!, Section 172. recognixes the dual nature of the company—first as a separate .city that can succeed or fail, and secondly as an association of members who will benefit from the company’s success.. so far. duties are owed to shareholders though, this is through the medium of the company, and not in their individual capacity.
Show that you are contrasting the pre- and post-2.61a.
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S. Directors’ Duties
Percival v Wright h9o2) 2 Ch 42t established that direct°rs do not owe duties to shareholders directly, whether …dually or collectively. In rare cases directors may owe duties directly to shareholders: where they act as the shareholder’s agent WI. trftyott TLR 4441 or there the nature of the company and director-shareholder relationship is such that direct°rs have taken on direct responsibilities to …holders (Coleman vMys. 1,977)2 NZLR 225; Re Ch. NI,. (Rmtoomntx) Ltd 1,921.13CLG Peskin vArderson 12..1 t BCLC ;72, former members cl.med directors had owed them a duty to disclose details of a pending sale. The court confirmed a