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Directors’ Duties

By June 21, 2018January 28th, 2021Dispute Resolution, For Business, Thought Leadership

Written by Jess Nield

The Companies Act of 2006 details all of the duties of a director however of these there are several key duties which are described below. This is not a comprehensive list but rather an overview and description of the most vital duties.

The first is for them to act within powers, meaning they must always comply with the Articles of Association of a company by only exercising the powers they were granted for the reasons they were granted.

Secondly, it is key that the director considers and makes decisions in good faith, for the promotion of the company’s benefit by identifying any likely consequences of the decision, the interest for the employees, the interest of the creditors (in times of insolvency) and the reputation of the company following the decision.

Thirdly, a director must exercise independent judgement on issues and decisions rather than simply acceding to requests.

In addition, a director should remain diligent, careful and well informed about the affairs of the company to a reasonable extent which would be determined by the knowledge, skill and capabilities of the director.

A director should avoid any conflicts between the interests of the director and the company, with the only exception to this occurring where the company consented to the conflict. To ensure keeping within this duty, a director is also responsible for declaring interest in a proposed transaction or agreement prior to it being entered into.

Moreover, a director has a duty not to accept any benefits from third parties for being a director or taking a specific action as a director.

Finally, the director has a duty to maintain confidentiality of the company’s affairs in order to protect the interests of the company.

If you have any queries in regards to directorship please contact Hannah Vachre or Alison Rocca in our litigation department.

Edited by Alison Rocca


Alison Rocca

Author Alison Rocca

Alison is a solicitor in our Litigation department.

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