Directors’ Duties (original) (raw)

Finance Director's Handbook, 2009

Abstract

Publisher Summary This chapter focuses on the duties of directors as prescribed by company law. The Companies Act 2006 includes a statutory statement of directors' duties, based on the principles that previously applied under common law and case law. A company director has fiduciary duties to the company (as a separate legal entity) and to its members as a whole, in addition to various legal responsibilities that apply to anyone running a business. A director must act in accordance with the company's constitution and in the way most likely to promote the success of the company for the benefit of the members as a whole. He or she should not enter into a transaction involving a personal interest unless he or she has disclosed that interest as required by company law. A director or former director must not use company property or information for his/her own benefit unless such use has been properly authorized and must not accept any benefit conferred by a third party unless acceptance has been properly authorized, or the benefit is necessarily incidental to the proper performance of his/her role as director. He or she must ensure that they do not infringe provisions on insider dealing when entering into transactions involving the company's shares and debenture. Under insolvency law, a liquidator can apply to the court for a director or former director to contribute personally to the company's assets if he/she knew, or should have known, that there was no prospect of the company avoiding going into insolvent liquidation. Directors also have a duty to keep proper accounting records and to prepare annual accounts for the company or group.

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