General duties of directors

Question 1

Name the KEY general duty of directors

Answer 1

To promote the success of the company

Question 2

Name 3 other key director duties

Answer 2

1. act within powers and reason conferred
2. declare any interest in proposed transaction
3. reasonable care, skill and diligence

Question 3

When can a director disclose their interest in transaction? (3)

Answer 3

1. at BM
2. in writing before BM
3. one off general notice

Question 4

What remedies are available for breach of directors’ duties? (7)

Answer 4

1. ratify before or after by OR
2. damages/compensation for negligence
3. rescission where failure to disclose interest
4. restoration of property
5. account of profits
6. injunction
7. removal + immediate termination of service contract (compensation for early end)

Question 5

What are 2 limitations for ratifying a breach

Answer 5

1. director concerned cannot count in quorum
2. cannot ratify unlawful act

Question 6

Name 2 potential defences for breach of director duties

Answer 6

1. took all reasonable steps to ensure company’s compliance
2. had no knowledge of the circumstances

Question 7

If there is conflict of interest, the director cannot vote or count towards quorum unless…(4)

Answer 7

1. MA14 is dissapplied by OR
2. MA14 is removed + replaced
3. unlikely to give rise to conduct
4. permitted cause

Question 8

When does a director not need need to declare an interest in a proposed transaction? (3)

Answer 8

1. unlikely to give rise to conduct
2. directors know or ought to have known
3. director is unaware