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Directors duties

About two or three years ago, the issue of "directors duties" was a hot-topic.

This was because the Companies Act 2006 codified the principles previously laid out in case law and various pieces of legislations.  

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Directors’ duties

Company directors must uphold seven general duties owed to the company in order to comply with the Companies Act 2006. These are as follows:

(a)   Duty to act within your powers

(b)   Duty to promote the success of the company

(c)   Duty to exercise independent judgment

(d)   Duty to exercise reasonable care, skill and diligence

(e)   Duty to avoid conflicts of interest

(f)    Duty not to accept benefits from third parties

(g)   Duty to declare an interest in a proposed transaction or arrangement

Action following a breach of directors’ duties

Failure to uphold any of these duties will result in a breach, which means the company can take legal action against the director, including in the form of:

  • an injunction (to stop the director carrying out or continuing the breach)
  • a claim for damages where the director has been negligent
  • an order for restoration of the company’s property

Failure to disclose an interest in an existing transaction or arrangement with the company is a criminal offence and so it comes with the risk of a fine. A breach of any of the other six duties can only be remedied by a civil claim against the director.

Further, a director who has breached his or her duty may be removed by the shareholders by ordinary resolution (a simple majority vote).

Often, directors and boards fall down where they are not aware of the rules. For example, many directors do not realise that when they stop being a director, some of these duties can continue; for instance, the duty to avoid conflicts of interest. It, therefore, follows that where a director breaches his or her duties, it is the company that brings the action against the director.

There are situations in which a director may be relieved of liability for a breach, for example, where they can show they acted honestly and reasonably. The breach can also be ratified by ordinary resolution of the company’s shareholders.

Understanding and fulfilling your obligations under the Companies Act 2006 can be challenging. This a highly specialised area of law and so it is highly recommended that you speak to an expert in the field at the earliest opportunity if you are a company wishing to bring a claim or a director who is being pursued. We offer straightforward and practical business law advice to companies and directors dealing with some of the most challenging commercial issues.

What can our business solicitors do for you?

As a commercial law firm we can call upon our commercial litigation solicitors or our employment lawyers to deal with advising companies who wish to bring a claim or directors who are being pursued.  Normally where a director is accused of breaching his or her duties, there can be many inter-tangled issues such as the dismissal of the director and the possible sale of their shares.

At these challenging times, you require expert legal advice and an efficient service. At Ironmonger Curtis, our commercial solicitors routinely advise and represent clients dealing with a director’s breach of their duties. We have the legal know-how and tenacious approach to get you the best possible outcome with the least possible disruption.

Ironmonger Curtis with Bell & Buxton is a full service law firm. As a practice, we deliver high-quality legal services without the large legal fees. We take the time to fully understand your commercial needs, so we can to focus our service and deliver advice and solutions that are both commercially aware and practical.

Contact us for Directors’ Duties Legal Advice Sheffield

Ironmonger Curtis with Bell & Buxton is a full service law firm based in Sheffield and serving Rotherham, Chesterfield, Barnsley, Dronfield and further afield. We provide pragmatic advice and an efficient service to businesses and pride ourselves on the strong, long-lasting relationships we with forge with our clients. Our expert solicitors provide guidance and representation in relation to company & commercial law, intellectual property, mergers and acquisitions, employment law, commercial litigation and commercial property.

To discuss an issue about directors’ duties or any other commercial law matter, call us on 0114 249 59 69 to find out how we can help or fill in our online contact form and we will get back to you shortly.

For business law advice call 0114 249 59 69


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