Directors and Directors Duties Flashcards
(24 cards)
Who has ultimate authority in a company under CA 2014?
The members/shareholders (s.25(2) CA 2014).
What section gives management powers to directors?
Section 158 CA 2014.
Name 3 decisions reserved for members by statute.
Change of company name (s.30)
Variation of share capital (s.83(3))
Alteration of constitution.
How are first directors appointed?
By subscribers to the constitution (s.144(2)).
Can directors be removed by ordinary resolution?
Yes, under s.146(1) CA 2014, even if constitution says otherwise.
Name a disqualification for acting as a director.
Being a minor (s.131), an undischarged bankrupt (s.132), or a company (s.130).
What is the EEA residency requirement for directors?
At least one director must be EEA-resident (s.137).
How many directorships can a person hold?
25 (s.142), with some exceptions (e.g. holding companies).
What case confirmed board autonomy from shareholders?
Automatic Self-Cleansing Filter v Cuninghame [1906].
When can members interfere with directors’ powers?
If directors exceed authority
In deadlock
If no valid board exists
If members amend constitution.
What section allows members to reserve powers from directors?
Section 158, through the company’s constitution.
What is a de facto director?
Someone who acts as a director without formal appointment (s.222).
What is a shadow director?
Someone whose directions the directors habitually follow (s.221).
What case defines a shadow director as a “puppet master”?
Re Unisoft [1994].
What is a nominee director?
Appointed to represent a particular interest; must still act in company’s best interest.
What is a non-executive director?
Not involved in daily management; still owes full duties.
What case held non-executives must still supervise responsibly?
Tralee Beef and Lamb [2008].
To whom are directors’ duties owed?
To the company alone (s.227(1), Percival v Wright [1902]).
What are the main types of directors’ duties?
Fiduciary duties
Duty of care, skill, diligence
Statutory duties.
What section codifies directors’ fiduciary duties?
Section 228 CA 2014 (explored next week).
What is the test for fiduciary breach?
Whether directors acted in good faith for the benefit of the company as a whole.
What case defines a fiduciary as owing “single-minded loyalty”?
Bristol & West v Mothew [1996].
What section requires a directors’ compliance statement?
Section 225 CA 2014.
When is a director presumed liable for company breaches?
If they were aware of the default and failed to prevent it.
