Have Directors' Duties of Care and Skill Become More Stringent? What has Driven this Development? Is this Development Beneficial? An Analysis of the Duty of Care in the UK in Comparison to the German Duty of Care

Abstract

The common law directors’ duties of care and skill in the UK have become more stringent over time and developed from a relatively lax traditional standard to a modern dual objective/subjective standard, now codified in section 174 Companies Act 2006. The article investigates the reasons for this development and considers the arguments for and against a purely subjective (or purely objective standard). It includes a discussion of the pre-codification English case law on the duty of care and skill, followed by an investigation of the modern view. Finally, the apparent differences between the British and German laws on directors’ duties of care and skill are examined and it is evaluated how different they are in reality.

Keywords: Duty of Care and Skill, Director, Company Director, Company Law, Corporate Law, Comparative Law, German Law, British Law

JEL Classification: K20, K22