BL - Director duties Flashcards
What does s.168 provide for
ordinary resolution to remove a director (but special notice of 28 clear days required)
🎩📅👀
Is it possible for the Board to remove a director?
No
When are directors automatically terminated?
- disqualified
- IVA)
- bankrupt
- a registered medical practitioner who is treating the director states in writing to the company that the director has become physically or mentally incapable of acting as a director and will remain so for more than three months.
What are the general duties of a director as set out in 171-177 CA 2006?
- Duty to act within powers (s 171 CA 2006); 🦸
- Duty to promote the success of the company for the benefit of the members as a whole (s 172 CA 2006); ⭐️
- Duty to exercise independent judgment (s 173 CA 2006); 🧠
- Duty to exercise reasonable care, skill and diligence (s 174 CA 2006); 🧑🔬
. - Duty to avoid conflicts of interest (s 175 CA 2006); 🗡️
- Duty not to accept benefits from third parties (s 176 CA 2006); and 🎁
- Duty to declare any interest in a proposed transaction (s 177 CA 2006). 🗣️
What does Duty to promote the success of the company mean?
Promote the success of the company for the benefit of its members as a whole
- the likely long-term consequences of any decision
- employees’ interests
- the need to foster relationships with suppliers, customers and others
- the impact of the company’s operations on the community and the environment
- the desirability of the company’s maintaining a reputation for high standards of business conduct
- the need to act fairly as between the members of a company
How is ‘reasonable skill, care and diligence’ defined?
person with:
- objective - the general knowledge, skill and experience that may reasonably be expected of someone in their role; and
- subjective - the general knowledge, skill and experience of that director.
When can the general directors duty to avoid a conflict not be breached?
🗡️
if the conflict arises:
- in relation to a transaction with the company (eg a transaction between the director and the company); 🏭
OR
- in relation to a matter which has been authorised by the directors.🎩👍
These conflicts are subject to the duty of disclosure in s 177 CA 2006 for transparency purposes but are not prohibited
🗣️
Is it possible for the other directors to authorise the acceptance of a benefit from a third party by reason of them being a director, or by reason of them doing (or not doing) anything as a director?
No
When is the receipt of a benefit from a third party by reason of them being a director, or by reason of them doing (or not doing) anything as a director NOT a breach of duty?
🎁
If the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest
🤷♂️
Does the duty to declare an interest under s.177 cover indirect interests?
Yes
When does s.177 ‘duty to disclose conflicts of interest’ not apply?
when:
- cannot reasonably be regarded as likely to give rise to a conflict of interest ❌🗡️
- not aware/ought to be aware of the interest or transaction 🤷♂️
- other directors know/ought to know about the conflict of interest; or 🎩👀
. - concerns service contract which has been or will be considered by the board 📝🎩🎩🎩
Can a director vote on or count in the quorum in respect of a transacation where they have a conflict?
(Answer is more than just yes or no)
No
Nothing in the legislation to stop it, but MA’s do. Can remove blocker so for can vote by OR
Who has the claim if a director breaches their duties?
The comapny
What remedies are available for breach s.174 of care, duty and diligence?
🧑🔬
Damages 💵
