Directors Roles and Authority Flashcards
Lectures 6 and 7 and Tutorial 3
List a fact about de facto directors.
A person can be a de facto director even though they are not called a director and did not intend to be, or know that they were a de facto director.
What is true about the directors of a parent company?
The directors of a parent company will be shadow directors of a subsidiary company if this is the only capacity in which they could have been acting at the relevant time.
What does section 40 of the CA2006 do?
It enables a person dealing with a company in good faith to enforce a contract against the company that is made by directors who have no authority to make it.
The duty to take account of creditor interests:
Requires that directors must treat the interests of creditors as overriding when the company has gone into insolvent liquidation.
What does section 172 of the CA2006 do?
Requires directors to manage the company in a way that benefits shareholders as a group.
A director who makes a contract in breach of the company’s constitution is:
In breach of his duty under section 171 CA 2006.
Jane is the managing director of Sales Ltd. The constitution of the company prohibits her from entering into contracts on the company’s behalf of more than £30,000, without the board’s permission. She makes a contract with Peter for £35,000 and Peter knows of the restriction in the constitution, but Jane tells him she has received the board’s permission. Describe Jane’s actions.
Jane has neither actual nor apparent authority to make the contract but Peter can rely on section 40 to enforce the contract against the company.
Shareholders can respond to directors taking decisions that they do not like by:
Passing an ordinary resolution to remove directors.
What is true of Bushell v Faith clauses? (3)
(1) Listed companies cannot insert BvF clauses into their articles of association. (2) That on a resolution to remove a director, their shares are automatically afforded more votes. (3) That a director can insist upon a poll vote, rather than a show of hands.
The CA2006 s250 clarifies for us that:
A director is a person occupying the position of director by whatever name called.
