BUSINESS LAW LECTURE 6 DIRECTORS

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

First Directors Appointed at the time of incorporation Their details must be specified in the application documents sent to Companies House

Further Appointments What do the Articles say?

What do directors do? The powers of management – see the Articles of Association

Directors’ Duties Ss CA’06 for general duties; and Ss. 188 – 226 CA’06 for specific duties requiring members’ approval

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

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

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

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

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

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

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

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