Company Law Flashcards
Percival v Wright 1902 establishes ?
Directors in fiduciary relationship with company so owe duties to the company
What is the duty of section 171?
Directors have a duty to act within powers
What is the duty of section 172?
Duty to promote the success of the company
Duty of section 171 means that you must act in accordance with the constitution and ?
Only exercise powers for the proper purpose for which they are Conferred
What happened in Hogg v Cramphorn 1967 and what directors duty failed?
Shares were issued not to raise capital but to stop takeover - failure of directors duty to act within powers
What is lord Wilberforce 2 step process for deciphering what is a proper purpose ?
- what is the power in question , on a fair view , and what is its nature and limits within which it may be exercised
- Is the substantial purpose is the power used for purposes which they were conferred or granted
Steps to decipher what the substantial purpose of the conduct is and whether it is for a proper purpose ? [ Hogg v cramphorn]
- identify the power in question
- Identify the proper purpose for which that power was given to directors (whether it is proper is discerned from articles)
- Identify the substantial purpose for which the power was in fact exercised and
- Decide whether that purpose was proper
Is section 172 easy or difficult to breach and why?
Section 172 is difficult to breach because in principle aslong as director acted in good faith will not be subject to judicial scrutiny
Regentcrest ltd v cohen 2001 says the question is what about directors in relation to section 172?
Question is whether the director honestly believed that his act or omission was in the interest of the company. The issue is as to the directors state of mind.
Although this test is subjective there is an allowance for the court to import some level of reasonableness in that the honest belief must be shown to be credible
Chatterbridge corp ltd v Lloyds bank ltd 1970 reasonableness test ?
Whether an intelligent and honest man in the position of the director of the company concerned, could in the whole of the existing circumstances have reasonably believed that the transactions were for the benefit of the company
Antuzis v dj houghton catching services ltd 2019 judgment said?
Cannot mistreat workers to maximise profits otherwise could do anything.
Conflicting duties in r on the application of people and planet v hm treasury 2009 ?
Main duty is success of company so environmental issues lost as would have detrimental effect on profits
What is the duty in section 173?
Duty to exercise independent judgement
Boulting v association of cinematograph television and Allied technicians 1963 established that you cannot what in relation to section 173 ?
Cannot agree to carry out duties in accordance with the instructions of another or subordinate the interests of those he should protect to the interests of someone else
Fulham football club v cabra estates 1994 facts
Fulham signed agreement with landlord of club premises in that Fulham would support Cabra development plans as Cabra paying and Fulham would not support local authority
Fulham directors then changed mind and decided to support local authorities under section 173
Fulham football club v Cabra estates 1994 judgment
Directors can still bind themselves to future exercise of their powers if contract is for benefit of company otherwise companies could be prevented from entering into commercially beneficial Contracts
Does section 173 prevent directors seeking advice and acting on it ?
No aslong as not treated as instruction
Duty in section 174?
Duty to exercise reasonable care, skill and diligence
Does section 174 require high or low standard of care from directors?
Low
Does Re Cardiff Savings bank, Marquis of Butler 1892 mean high or low standard of care required from directors and why ?
Low as director appointed at 6 months old and only attended 1 meeting in 39 years… bank went bust but directors held not responsible
Does Re Forest of Dean Coal mining Co 1878 mean high or low standard of care required from director and why?
Low as directors were not expected to put Same attention as managing partners - only attend meetings
Section 174 (2) states that a directors actions will be measured against?
The conduct expected from a reasonably diligent person and subjective consideration in relation to special skills will apply
Section 174 director comparison against the reasonable diligent person comes from what case and judge?
Lord Hoffman in Norman v Theodore Goddard 1991
Re Djan of London ltd 1994 case summary and judgment
Director negligent in signing proposal form for fire insurance which led to insurance being void - he signed without reading which was deemed to be a breach of care
What is the duty in section 175?
Duty to avoid conflicts of interest
Bray v Ford famous for ?
Person in Fiduciary position is not allowed to make profit or put himself in a position where his interest and duty Conflict
Boulting 1963 says what about conflict of interest
Must be a realistically sensible possibility of conflict
Bhullar v bhullar 2003 confirms that ?
Director owes duty to avoid conflict of interest , including through the exploitation of corporate opportunity
Bought adjacent car park privately without disclosing to company and should have as company would have been interested potentially
