Directors, officers and auditors Flashcards
How can a minimum and maximum number of directors be fixed?
By ordinary resolution
How can directors be appointed?
By ordinary resolution of the members or by the directors
R v Seager 2009
The use of a DDO is intended to ensure that only reasonably competent, responsible and honest people act as company directors
IN01
Form where you put all new directors
TM01
Termination of directorship form
Re Hydrodam (Corby) Ltd 1994
De facto directors are individuals are individuals holding themselves out as directors without any formal appointment, shadow directors are people exercising clandestine control over the nominal directors
SoS for Trade and Industry v Deverell 2001
It is possible for someone to be a shadow director openly
SoS for Trade and Industry v Hall and Another 2006
Guidance on whether someone is a de facto director:
- whether he has through his control of a corporate director made himself a de facto director;
- whether he caused the corporate director to take actions in relation to the company that were instrumental in the running of the company
- how much control the individual has over the corporate director
Re Richborough Furniture Ltd 1996
De facto directors can be disqualified under s6 CDDA
Can the powers given to directors be exercised by members?
No, but if the directors are unable or unwilling to act, the members have the power to act to remedy the situation
Smithton v Naggar 2005
The importance of looking objectively at the capacity in which a director is acting and whetehr responsibility has been assumed was stressed, definitions of shadow, de facto and de jure director
Eclairs Group Ltd and Glengary Overseas Ltd v JKX Oil and Gas plc 2015
Directors’ powers under articles to impose a restriction on shareholders’ rights could be exercised only for the purpose for which they had been conferred (proper)
Any delegation under Art 5 is…
Subject to conditions imposed by the board and may always be revoked or altered by the board
If employees to whom power has been delegated behave improperly…
The directors are not liable too the company
What can the board to in relation to the managing director?
Specify what the managing director’s powers are to be and impose conditions, even where the powers given are to the exclusion of the powers of the board
Smith v Butler 2012
Where there was no express delegation of powers by the board to the company to its managing director, the implied delegation did not have the effect of excluding the powers of the board
Categories of directors’ duties
Fiduciary duties, duties of care and skill and statutory duties
The overriding duty of a director
To act in good faith in the best interests of the company
Item Software UK Ltd v Fassihi and Ors 2994
The overriding duty includes a requirement to disclose one’s own misconduct
The overriding duty’s two specific obligations
- Not to make any secret profit out of the position
2. To exercise one’s powers bona fide for the benefit of the company as a whole
To whom are directors’ duties owed?
To the members as the body corporate
