LAW CASES STATUE PERSON EXTRA
3. DIRECTORS’ GENERAL DUTIES
Codification of duties:
General duties now appear in Part 10 of the 2006 Act
Originally developed by the courts: ‘duty of care and skill’ for directors: Bristol and
west Building Society v Mothew 1996
Department of Trade and Industry, “Company Law Reform” Commission 6456 2005:
It was hoped that the code would “make the law in this area more consistent,
accessible and comprehensible” to people in businesses.
Changes requested by Company Law Review: based on objectives of maximising
clarity and accessibility they recommended that the duties of the D should be codified
by the way of statutory restatement
Andrew Keay: It could be argued that we have moved from a statue and case law
amalgam to a largely codified system of law.
o It might be hoped that the Companies Act 2006 has taken us away from this
need to continually tinker and update.
o The company code is now comprehensive and encompassing
To whom do D owe their duties:
s170(1) CA 2006: a director, who is subject to the “general duties” set out in s171-77,
owes these duties “to the company”.
o This enshrined the principle stemming from Percival v Wright 1902 which
held that the directors of a company owed fiduciary duties not to the SH, but
to the company.
o S170(3): General duties are based on common law rules and equitable
principles
o Gowling WLG 2009 article on lexology: the old common law rules remain
intact and have continuing relevance
o s170 (4) CA 2006: Scope and nature of the general duties will be interpreted
and applied in the same way as the common law
o Swinfen Eady J stressed that to hold otherwise would place directors in a most
invidious position, as they could not buy or sell shares without disclosing
negotiations, a premature disclosure of which might well be against the best
interest of the company
o This rational was explained by Lord Cullen in Dawson International v Coats:
the directors are not normally the agents of the current SH, they have but one
master, the company.
o Parker Hood: this statutory statement is to be welcomed
A breach of duty is therefore a wrong done to the company and the proper claimant in
proceedings in respect of the breach is the company itself: as set out in Foss v
Harbottle 1843 and Part 11 CA 2006; Chapter 10
Page 1 of 11
3. DIRECTORS’ GENERAL DUTIES
Codification of duties:
General duties now appear in Part 10 of the 2006 Act
Originally developed by the courts: ‘duty of care and skill’ for directors: Bristol and
west Building Society v Mothew 1996
Department of Trade and Industry, “Company Law Reform” Commission 6456 2005:
It was hoped that the code would “make the law in this area more consistent,
accessible and comprehensible” to people in businesses.
Changes requested by Company Law Review: based on objectives of maximising
clarity and accessibility they recommended that the duties of the D should be codified
by the way of statutory restatement
Andrew Keay: It could be argued that we have moved from a statue and case law
amalgam to a largely codified system of law.
o It might be hoped that the Companies Act 2006 has taken us away from this
need to continually tinker and update.
o The company code is now comprehensive and encompassing
To whom do D owe their duties:
s170(1) CA 2006: a director, who is subject to the “general duties” set out in s171-77,
owes these duties “to the company”.
o This enshrined the principle stemming from Percival v Wright 1902 which
held that the directors of a company owed fiduciary duties not to the SH, but
to the company.
o S170(3): General duties are based on common law rules and equitable
principles
o Gowling WLG 2009 article on lexology: the old common law rules remain
intact and have continuing relevance
o s170 (4) CA 2006: Scope and nature of the general duties will be interpreted
and applied in the same way as the common law
o Swinfen Eady J stressed that to hold otherwise would place directors in a most
invidious position, as they could not buy or sell shares without disclosing
negotiations, a premature disclosure of which might well be against the best
interest of the company
o This rational was explained by Lord Cullen in Dawson International v Coats:
the directors are not normally the agents of the current SH, they have but one
master, the company.
o Parker Hood: this statutory statement is to be welcomed
A breach of duty is therefore a wrong done to the company and the proper claimant in
proceedings in respect of the breach is the company itself: as set out in Foss v
Harbottle 1843 and Part 11 CA 2006; Chapter 10
Page 1 of 11
