Directors' powers & rights

Question 1

where do D’s powers come from and how must they exercise this?

Answer 1

D’s powers to make decisions on behalf of the company come from:
o The AAs
o Law i.e. Companies Act 2006 & common law
o SH resolutions

Ds must always exercise powers in accordance with their statutory duties and AAs

Question 2

what are powers do D’s have under the MAs? (6)

Answer 2

• Power of general management to run the company
• Power to delegate (otherwise every decision would need to be made at a BM)
• Power to appoint a chairperson at BMs
• Power to recommend dividends
• Power to pay interim dividends
• Power to refuse transfer of shares

Question 3

what powers do D’s have under statute? (4)

Answer 3

• Power to bind the company with third parties acting in good faith
• Power to call general meetings
• Power to allot shares (subject to requirements)
• Power to execute documents on behalf of the company

Question 4

explain D’s authority to bind the company, inc. the types of authority

Answer 4

If D enters into a contract on behalf of the company and they do not have actual or apparent authority, D will be personally liable to the third party
o Express actual authority = specifically authorised by the board
o Implied actual authority = implied by virtue of their position
o Apparent authority = appears to the 3rd party D has authority

Question 5

what rights to Ds have? (4)

Answer 5

• Right to participate in BMs (subject to COIs)
• Right to access company information
• Right to receive notice of GMs
• Rights pursuant to their service contract i.e. possible payment for loss of office