BUSINESS LAW LECTURE 6 DIRECTORS. What is a Director? S. 250 CA’06 “ Director” ‘In the...
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Transcript of BUSINESS LAW LECTURE 6 DIRECTORS. What is a Director? S. 250 CA’06 “ Director” ‘In the...
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BUSINESS LAW
LECTURE 6 DIRECTORS
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What is a Director?
S. 250 CA’06 “ Director”
‘In the Companies Acts “ director” includes any person occupying the position of director, by whatever name called’
Every company must have at least ONE director
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First Directors
Appointed at the time of incorporationTheir details must be specified in the
application documents sent to Companies House
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Further Appointments
What do the Articles say?
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What do directors do?
The powers of management – see the Articles of Association
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Directors’ Duties
Ss.170 181 CA’06 for general duties; and
Ss. 188 – 226 CA’06 for specific duties requiring members’ approval
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Pre CA’06
Directors were under a series of common law duties not to be negligent
• Not to make a secret profit• To avoid a conflict of interest• To act in the best interests of the
company
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S. 171
Duty to act within the company’s powers
This means to act within the company’s constitution and to use powers ONLY for the purpose for which they were given
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S. 172
Duty to promote the success of the company
This means directors must act in the best interests of the company for the benefit of its members
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S. 173
Duty to exercise independent judgment
This means directors must act within the constitution but can tie themselves to work in a certain way should they wish
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S. 174
Duty to exercise reasonable care and skill and diligence
This means a director must act with the skill reasonably expected of a person carrying out the function of director and with the knowledge skill and experience of this particular director
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S. 175
• Duty to avoid a conflict of interest (unless authorised by the company)
This means a director must not place himself in a position where he stands to gain from a deal at the expence of the company
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S. 176
Duty not to accept benefits from third parties that are likely to give rise to a conflict of interest
This means a director must act at all time impartially otherwise he must seek authorisation from the members
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S. 177
Duty to declare interests in proposed transactions with the company likely to cause a conflict of interest with the company
This means the director must get authorisation from the other directors before the company enters into the transaction
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