Q&As

Are there any limits on the powers of an individual director of a private limited company and what impact does this have on dealings with third parties?

read titleRead full title
Published on LexisPSL on 13/01/2015

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Are there any limits on the powers of an individual director of a private limited company and what impact does this have on dealings with third parties?
  • A director’s powers
  • Limitations on a directors powers
  • Effects of restrictions on powers of a director on third parties

In brief, directors derive their powers from the articles of association, statutory provisions and common law. The company’s articles may also contain provisions that enable the shareholders to confer powers on the directors by passing special resolutions. Directors’ powers may be limited by the company’s articles of association, the directors’ statutory duties and matters reserved to the shareholders by legislation (eg transactions with directors).

In practice, the articles of association of a company will often contain provisions that delegate the day-to-day management/running of the company to the board of directors as a whole. The board, in turn, can delegate such of those powers as it chooses to one or more individual directors.

It is helpful to consider what effect a restriction on the powers of one director has on third parties, ie will ultra vires acts by a director still bind the company?

A director’s powers

Practice Note: Powers of directors summarises the nature and extent of a director’s powers to manage a company.

Directors derive their powers to act from a company’s articles of association, statute and common law. The company’s articles may also contain provisions that enable the shareholders to confer powers on the directors by passing special resolutions, eg article 4 of

Related documents:

Popular documents