Directors' duties—a quick guide
Directors' duties—a quick guide

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Directors' duties—a quick guide
  • Who are directors?
  • What are the general duties?
  • Interpreting and applying the general duties
  • Who can enforce a breach of the general duties?
  • What are the consequences of a breach of the general duties?
  • Protecting directors from liability for a breach of the general duties

Directors, and in some cases shadow directors, owe numerous duties to a company. Many of those duties have been developed by the courts over hundreds of years from more general common law rules and equitable principles, and some have now been enshrined in statute. The duties of a director set out in the Companies Act 2006 (CA 2006), ss 171–177, often known as the general duties, are considered in this Practice Note.

The general duties are not intended to be an exhaustive list of all the duties owed by a director. There are other directors' duties that arise, as well as various legal requirements that a director must comply with in order to avoid liability (which are beyond the scope of this Practice Note), eg, a director should be mindful of:

  1. other duties they may have under the CA 2006, such as the duty to call meetings required by members or the duty to keep accounts

  2. potential liabilities in an insolvency situation (when they may need to take into account the interests of creditors), eg liability for fraudulent trading, wrongful trading, transactions that were carried out at an undervalue of preferences (see further Practice Note: Directors’ duties: companies in financial difficulties)

  3. potential liabilities under environmental legislation, eg offences committed with the consent, connivance or neglect of any director, manager, secretary or other