Directors Duties Essay Flashcards
(17 cards)
To whom do directors owe their duties under Irish company law?
To the company alone (s.227 CA 2014; Percival v Wright [1902]).
What statute codifies directors’ duties in Ireland?
Part 5 of the Companies Act 2014, especially sections 158, 225, 227–228.
What is the significance of s.228 CA 2014?
It codifies fiduciary and statutory duties that were previously governed by common law.
What are the main fiduciary duties of directors?
Act in good faith in the best interest of the company
Avoid conflicts of interest
Not make secret profits
Act for proper purposes
Which case defines fiduciary loyalty?
Bristol & West BS v Mothew [1996] – “single-minded loyalty” is the distinguishing feature of fiduciaries.
What case held directors liable for improper share issuance?
Howard Smith v Ampol Petroleum [1974].
What standard is required for a director’s duty of care?
Reasonable care, skill, and diligence expected of a person in that position (s.228 CA 2014).
Can non-executive directors be liable for inaction?
Yes, as in Re Mitek Ltd [2010] – they must not be “mere ciphers.”
What is a shadow director?
A person whose instructions the board habitually follows (s.221 CA 2014; Fyffes v DCC [2005]).
What is a de facto director?
A person who acts as a director without formal appointment (s.222 CA 2014; Re Hydrodam [1994]).
What is a nominee director’s duty?
Must act in the interests of the company, not their appointer (Scottish Co-op v Meyer [1959]).
What case held non-executive directors must still supervise actively?
Tralee Beef and Lamb [2008].
What does section 158 CA 2014 cover?
General power of management: directors manage the business unless otherwise stated in the constitution.
What is required under s.225 CA 2014?
Directors must file a compliance statement with the company’s annual report.
Can directors be criminally liable under CA 2014?
Yes, especially if they authorise or permit breaches and fail to take reasonable steps to prevent them.
Are directors’ duties ever owed to others besides the company?
Rarely. Exceptions include:
Prospectus liability under s.1349–1350 (duties to investors)
In insolvency, indirect duties to creditors.
What is the rule in Foss v Harbottle?
Only the company itself can sue directors for breaches of duty.
