The Company’s Remedies for Breach of Directors’ General Duties

2017 ◽  
Author(s):  
Antony Zacaroli
Keyword(s):  
Common Law ◽  
Fiduciary Duty ◽  
Reasonable Care ◽  
The Common ◽  
Breach Of Duty ◽  
A Company ◽  
Made In

The Companies Act 2006 has effected no change to the remedies which lie against a director for breach of duty. Section 178(1) provides that ‘the consequences of breach (or threatened breach) of s 171–7 are the same as would apply if the corresponding common law rule or equitable principle applied’, and s 178(2) provides that the duties set out in ss 171–3 and 175–7 ‘are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors’. No separate express provision is made in respect of the duty to exercise reasonable care, skill, and diligence (set out in s 174), but it is clear that the remedies for breaches of that duty are those provided by the common law.

Directors’ Duties

2018 ◽  
Author(s):  
Victor Joffe QC ◽  
David Drake ◽  
Giles Richardson ◽  
Daniel Lightman QC ◽  
Timothy Collingwood
Keyword(s):  
Common Law ◽  
Corporate Law ◽  
Legal Analysis ◽  
Legal Personality ◽  
Reasonable Care ◽  
A Company ◽  
Normative Role

The general duties imposed upon directors are the corollary of their powers; they spring from the directors’ functional and normative role in conducting the company’s affairs and affecting its legal relations. Corporate law and the constitution of the company repose in them powers to act, within certain bounds, in the company’s name. And in doing so, they necessarily affect all those interested in the company’s fortunes: most fundamentally, its members. The separate legal personality afforded to a company serves, for the purposes of legal analysis, as a nexus for its members’ interests, and makes it possible to describe directors in the exercise of their powers as agents for the company. These tenets explain the origin of some of the basic duties that apply to directors in relation to the exercise of their functions: to promote the interests of the company; to exercise reasonable care, skill, and diligence; not to exceed the limits of their powers; not to profit from their position; and not to place themselves in positions where their own interests or other duties conflict with their duties to the company. In doing so, they draw on equitable and common law principles of wider application, to agents, trustees, partners, and professionals.

Duty Not To Accept Benefits From Third Parties

2017 ◽  
Author(s):  
Tamlyn Lloyd ◽  
Haywood Marcus
Keyword(s):  
Conflicts Of Interest ◽  
Common Law ◽  
Third Parties ◽  
The Other ◽  
The Common ◽  
Breach Of Duty

One of the consequences of the common law principle that a director must avoid conflicts of interest was that a director could not have an interest in a transaction with the company unless he had disclosed all material facts about the interest to the members and they had approved or authorized his having the interest. Authorization by the board was not sufficient. If the other party to the transaction had notice of the irregularity, the company might rescind the contract. The director might also be liable for breach of duty and under a duty to account for profits obtained by reason of such dealings.

10. Distributions and maintenance of capital

2019 ◽  
pp. 252-281
Author(s):  
Derek French
Keyword(s):  
General Principle ◽  
Common Law ◽  
Court Cases ◽  
Share Capital ◽  
Capital Transfer ◽  
The Common ◽  
A Company

This chapter examines the controls imposed on return of a company’s capital to its members, first by considering the common law general principle that return of capital to shareholders is illegal unless permitted by statute. It then discusses the problem of how to distinguish between a legal distribution of profits and an illegal return of capital; transfer of profits to a capital redemption reserve and use of profits to pay up bonus shares; company’s issuance and redemption of redeemable shares or purchase of its own shares; purchased shares as treasury shares; and how a company may reduce its issued share capital by special resolution. The chapter also looks at capitalisations and employees’ share schemes. It includes analysis of three court cases that are particularly significant to distributions and the maintenance of capital.

3. The constitution of the company

2020 ◽  
pp. 43-60
Author(s):  
Lee Roach
Keyword(s):  
Common Law ◽  
Essential Information ◽  
The Common ◽  
A Company

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the company constitution. A company’s constitution consists primarily of the articles of association and agreements and resolutions affecting the company’s constitution. The constitution forms a statutory contract between the company and its members, and between the members themselves, but only those provisions relating to membership rights will constitute terms of the statutory contract. A company can alter its articles by passing a special resolution, although statute and the common law restrict a company’s ability to alter its articles.

The Concept of a Meeting and Quorum

2020 ◽  
Author(s):  
Leslie Kosmin ◽  
Catherine Roberts
Keyword(s):  
Common Law ◽  
Orderly Fashion ◽  
The Common ◽  
The Creation ◽  
Regular Manner ◽  
A Company

The need to hold a meeting will arise in many different and diverse situations. All meetings are subject to procedural rules and regulations of the particular institution that has convened the meeting. The reason why there are rules and regulations is so that the participants at a duly convened meeting can transact business in a lawful manner and so that they will be able to debate and discuss issues in an orderly fashion. This book is concerned with the meetings of solvent companies that are registered and incorporated under the statutory provisions regulating companies. The reason for the requirement for meetings under the Companies Act 2006 (CA 2006) is so that the members can attend either in person or by proxy in order to debate and vote on matters affecting the affairs of a company. There are a number of procedures, some that are derived from the common law and others that are the creation of statute, that have to be observed in order for a meeting of a company to transact business in a lawful and regular manner.

scholarly journals THE STUDY ON THE SEPARATION OF OWNERSHIP AND CONTROL OF MALAYSIAN COMPANIES

2019 ◽  
pp. 36-44
Author(s):  
Kamaliah Salleh ◽  
Noor ‘Ashikin Hamid ◽  
Noraida Harun ◽  
Asiah Bidin ◽  
Zuhairah Ariff Abd Ghadas
Keyword(s):  
Content Analysis ◽  
International Law ◽  
Common Law ◽  
Best Interests ◽  
Board Meeting ◽  
Judicial Decisions ◽  
Legal Position ◽  
The Common ◽  
And Control ◽  
Made In

The members own the company by virtue of their shareholding and the directors manage and exercise control over the company’s affairs through the company’s board meeting. Despite segregation of powers and roles between the members and directors, there has been an inclination on the part of the members to participate to a greater extent in the company’s affairs. This paper aims to establish the legal position as between the directors and members that reflect the separation of control and ownership in the company under the common law and the Malaysian law. The method used in this study is the content analysis of the reported Malaysian and international law cases as well as the statutory provisions in order to examine the legal position established under the common law, the previous Companies Act 1965 and the newly introduced Companies Act 2016. The study reveals that the separation between the two has long been recognized and upheld by the common law as well as the Malaysian Acts. The introduction of section 195 of the Companies Act 2016, however, allows members to raise their voice in relation to matters which are within the powers of directors, hence the separation becomes slightly vague. In the absence of the latest judicial decisions to test the application of section 195, further review on its application may be required in order to determine methods to measure if a members’ recommendation is truly made in the best interests of the company.

16. Directors’ duties

2018 ◽  
Author(s):  
Derek French
Keyword(s):  
Conflicts Of Interest ◽  
Third Parties ◽  
Fiduciary Duty ◽  
Reasonable Care ◽  
Breach Of Duty ◽  
Secondary Liability

This chapter deals with the seven general duties of directors as spelled out in the Companies Act 2006: duty to act within powers; duty to promote the success of the company; duty to exercise independent judgement; duty to exercise reasonable care, skill and diligence; duty to avoid conflicts of interest; duty not to accept benefits from third parties; and duty to declare interest in proposed transaction or arrangement. After providing a background on the codification of directors’ general duties, the chapter turns to the fiduciary duty of directors, including shadow and de facto directors. It also examines statutory requirements involving property transactions; loans, quasi-loans and credit transactions; associated companies and persons ‘connected’ with a director; equitable remedies for breach of duty; the ways in which directors can be relieved of liability; and secondary liability with regards to property.

4. Promoters and pre-incorporation contracts

2016 ◽  
Author(s):  
Alan Dignam ◽  
John Lowry
Keyword(s):  
Common Law ◽  
Legal Aspects ◽  
Freedom Of Establishment ◽  
Fiduciary Duties ◽  
The Core ◽  
The Subject ◽  
The Common ◽  
A Company ◽  
Corporate Mobility

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on one area where the motives of ‘promoters’ (that is, those who form a company) are relevant to the legal aspects of certain activities carried out in the company’s name, especially when they enter into contracts for the company prior to its formal registration. After defining the term ‘promoter’, the chapter discusses the fiduciary duties of promoters and the range of remedies available to the company against a promoter who breaches his fiduciary duties. It then considers problems involving contracts entered into prior to incorporation and the common law position on such contracts. It also explains pre-incorporation contracts, deeds, and obligations under Section 51 of Companies Act 2006 before concluding with an analysis of the issue of corporate mobility in relation to the freedom of establishment.

4. Promoters and pre-incorporation contracts

2018 ◽  
Author(s):  
Alan Dignam ◽  
John Lowry
Keyword(s):  
Common Law ◽  
Legal Aspects ◽  
Freedom Of Establishment ◽  
Fiduciary Duties ◽  
The Core ◽  
The Subject ◽  
The Common ◽  
A Company ◽  
Corporate Mobility

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on one area where the motives of ‘promoters’ (that is, those who form a company) are relevant to the legal aspects of certain activities carried out in the company’s name, especially when they enter into contracts for the company prior to its formal registration. After defining the term ‘promoter’, the chapter discusses the fiduciary duties of promoters and the range of remedies available to the company against a promoter who breaches his fiduciary duties. It then considers problems involving contracts entered into prior to incorporation and the common law position on such contracts. It also explains pre-incorporation contracts, deeds, and obligations under Section 51 of Companies Act 2006 before concluding with an analysis of the issue of corporate mobility in relation to the freedom of establishment.

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