Critically Examine the Seven General Duties of the Directors Under Company Act 2006

17 Pages Posted: 5 May 2015

Date Written: November 10, 2014

Abstract

The purpose of this paper is to critically examine the duties that directors owe to their companies in the light of the Companies Act 2006. The CA 2006 has introduced many reforms and consolidated of much of the existing legislation affecting companies, through simplifying the provisions of the director’s duties. The codification of director’s duties was one of the most controversial aspects of the reform programme culminating the CA 2006. Some argues that codification would reduce the flexibilities of the common law. However, it is true that 2006 Act has certainly made the duties more accessible. The increased awareness of the statutory duties would lead to increased direct enforcement of director’s duties. It has been pondered whether the statutory clarification of directors duties might herald an increase in derivative actions against directors in based on claim in relation to s172. At the same time it is also true that an increased transparency may also lead to increased compliance and consequently to less litigation.

This research is entitled critically examine the seven general duties of directors under CA 2006. A critical analysis will be carried from the selected literatures which focus on the extensive analysis of director’s duties under section 171-177 of the CA 2006. This research will argue that in codifying director’s duties the Company’s Act 20006 creates a legal presumption that directors owe their duties to shareholders and other parties interested in takeover activities for which the company is involved. In the conclusion it is suggested that in the study of directors duties an integrated approach, which looks at the accountability spectrum as well as the substantive content of the duties, facilitates a realistic appraisal of the impact of directors duties in U.K. This paper will provide some useful source of impartial information for academics, lawyer’s directors and those advising directors to gain an understanding of director’s duties under English law.

Suggested Citation

Miah, Md. Suhel, Critically Examine the Seven General Duties of the Directors Under Company Act 2006 (November 10, 2014). Available at SSRN: https://ssrn.com/abstract=2602321 or http://dx.doi.org/10.2139/ssrn.2602321

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