THE DIRECTORS DUTY

The Directors Duty

Table of Content

Introduction1

Director1

Directors' Duties2

Establishment Of Registered Corporations7

Companies Acts8

The Companies Act 200611

Powers of the Directors12

The Liability Of Directors14

The Issue Of Corporate Governance14

Disqualification Of Directors15

Conclusion16

References18

Appendix A20

Research Trail20

Essay Question20

Text: Library search for Companies Act20

Internet Resources:21

Other Primary Sources21

Case Laws23

The Directors Duty

Introduction

The report argues the roles and responsibilities of a director. Report is based on the analysis of a statement that is: “UK was one of the first nations to establish rules for the operation of companies. Today our system of company law and corporate governance, setting out the legal basis on which companies are formed and run, is a vital part of the legal framework within which business is conducted. The study aims to discuss the role of Companies Act 2006 strives to provide clear guidance on Directors' Duties to the directors, shareholders and stakeholders of hugely different companies. Effective use of Companies Act 2006 is providing a strong corporate governance for companies.

Director

Directors decide the strategic direction and oversee the management of a company's business. Company law contemplates that they will act collectively as a board of directors. The role and functions of directors are not prescribed by legislation but are left to be fleshed out by company participants according to business need (Butcher 2002,p. 45). Every company must have directors. Private companies may operate with a sole director. Directors are not automatically managers or employees although, in practice, they will often be employed under service contracts. Listed companies are required to appoint non-executive directors from outside to provide an independent voice on such matters as the appointment and remuneration of the executive directors.

Directors formally appointed in accordance with the procedures in the company's articles of association and who have consented to act are de jure directors. De jure directors are subject to directors' duties. Persons who are not de jure directors may be treated as such in law so as to render them liable for breach of directors' duties and/or to bring them within the scope of the disqualification regime (Chivers 2007).

Directors' Duties

Directors have extensive legal duties which can be categorized as follows:

fiduciary duties;

duty of care and skill;

statutory duties.

As a general rule, directors' civil law duties are owed to and are enforceable by the company as a legal person acting through its board, general meeting, or (in the event of insolvent liquidation) liquidator (Companies Act 2006). Individual members cannot bring proceedings for breach of these duties against wrongdoing directors.

First, let us consider fiduciary duties. Directors are agents of the company and are treated as fiduciaries. Accordingly, they are subject to the category of legal obligations known as fiduciary duties, which were developed historically by the courts of equity to regulate the conduct of trustees. Fiduciary duties are concerned with concepts of honesty and loyalty rather than competence or negligence. They seek to ensure that directors pursue the company's interests rather than their own personal interests. In an attempt, to make the law more accessible, the underlying equitable principles distilled and the duties set out in statutory form in ...