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Legal Terms - directors’ duties
Duties incumbent upon a corporate director. The objective of these duties, grounded in common law and equitable principles, is to protect the company's interests. The obligations are owed to the company (Companies Act 2006 s 170) and also extend to *shadow directors as delineated by common law or equitable principles (s 170(5)). The Companies Act delineates seven "general" obligations.
• The obligation to operate within the confines of the company's constitution and to utilize powers for their intended purposes (s 171) (Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821(PC); Eclairs Group Limited v JKX Oil & Gas Plc [2015] UKSC 71); • The obligation to act in good faith to advance the company's success for the benefit of all its members (s 172) (Re Smith & Fawcett Ltd [1942] Ch 304); • The obligation to exercise independent judgment (s 173) (Fulham Football Club Ltd v Cabra Estates plc [1994] 1 BCLC 363(CA)); • The obligation to demonstrate reasonable care, skill, and diligence (s 174) (Re City Equitable Fire Insurance Co Ltd [1925] Ch 407); • The obligation to avoid conflicts of interest (s 175) (Regal (Hastings) Ltd v Gulliver [1942] 2 AC 134(HL)); • The obligation not to accept benefits from third parties (s 176) (Boston Deep Sea Fishing Co v Ansell [1888] 39 Ch D); • The obligation to disclose any interest in proposed transactions or arrangements with the company (s 177).
Duties incumbent upon a corporate director. The objective of these duties, grounded in common law and equitable principles, is to protect the company's interests. The obligations are owed to the company (Companies Act 2006 s 170) and also extend to *shadow directors as delineated by common law or equitable principles (s 170(5)). The Companies Act delineates seven "general" obligations.
• The obligation to operate within the confines of the company's constitution and to utilize powers for their intended purposes (s 171) (Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821(PC); Eclairs Group Limited v JKX Oil & Gas Plc [2015] UKSC 71); • The obligation to act in good faith to advance the company's success for the benefit of all its members (s 172) (Re Smith & Fawcett Ltd [1942] Ch 304); • The obligation to exercise independent judgment (s 173) (Fulham Football Club Ltd v Cabra Estates plc [1994] 1 BCLC 363(CA)); • The obligation to demonstrate reasonable care, skill, and diligence (s 174) (Re City Equitable Fire Insurance Co Ltd [1925] Ch 407); • The obligation to avoid conflicts of interest (s 175) (Regal (Hastings) Ltd v Gulliver [1942] 2 AC 134(HL)); • The obligation not to accept benefits from third parties (s 176) (Boston Deep Sea Fishing Co v Ansell [1888] 39 Ch D); • The obligation to disclose any interest in proposed transactions or arrangements with the company (s 177).
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