Directors' duties—directors' conduct: CA 2006, ss 171–174
Directors' duties—directors' conduct: CA 2006, ss 171–174

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

  • Directors' duties—directors' conduct: CA 2006, ss 171–174
  • Duty to act in accordance with the company's constitution and properly exercise powers
  • Duty to promote the success of the company
  • Duty to exercise independent judgment
  • Duty to exercise reasonable care, skill and diligence

The main directors’ duties developed by the courts were set out in statute for the first time in the Companies Act 2006 (CA 2006), ss 171–177 and all of those statutory duties (the general duties) are set out in Practice Note: Directors' duties—scope, nature, interpretation and application.

The first four general duties are:

  1. the duty of a director to act in accordance with the company's constitution and only exercise powers for the purposes for which they are conferred

  2. the duty of a director to act in a way the director considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole and in doing so have regard to various matters

  3. the duty of a director to exercise independent judgment

  4. the duty of a director to exercise reasonable care, skill and diligence

In relation to the fifth, sixth and seventh general duties, see Practice Note: Directors' duties—directors' interests: CA 2006, ss 175–177.

Note that the common law rules and equitable principles on which the general duties are based continue to be relevant when (among other things) interpreting and applying the general duties.

Duty to act in accordance with the company's constitution and properly exercise powers

A director has a duty to:

  1. act in accordance with the company's constitution (ie, the