Powers of directors
Powers of directors

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

  • Powers of directors
  • Where do the directors’ powers come from?
  • Powers conferred by the articles of association
  • Powers conferred by statute
  • Common law powers
  • Powers conferred by shareholder resolution
  • Limitations on the directors’ powers
  • The articles of association
  • Directors’ statutory duties
  • Matters reserved to members by legislation
  • More...

The directors of a company are responsible for the day-to-day management of that company.

The directors make decisions on behalf of the company in order that it can carry on its business, including making decisions relating to the company:

  1. raising funds

  2. entering into contracts

  3. purchasing or renting premises

  4. acquiring stock or equipment, and

  5. employing people

For details on decision making by directors, and the processes and procedures typically involved, see Practice Notes: Directors’ decision-making—power, authority and duties, Directors’ decision-making—convening board meetings, Directors’ decision-making—conduct at board meetings, Directors’ decision-making—post board meeting formalities and Directors’ decision-making—written resolutions and decisions by sole directors.

Where do the directors’ powers come from?

The directors are empowered to act on the company’s behalf by:

  1. the company’s articles of association

  2. the Companies Act 2006 (CA 2006)

  3. common law, and

  4. any applicable resolutions of its members

The directors’ powers are subject to:

  1. any provisions in the company’s articles of association limiting those powers

  2. the directors’ general duties as set out in CA 2006, and

  3. matters reserved to the members by CA 2006

Powers conferred by the articles of association

For companies subject to the model articles, the directors have a general power to manage the company:

‘Subject to the articles, the directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company.’

In addition to the power of general management,

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