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Directors’ duties and companies limited by guarantee—restriction on distributions in a company’s constitution cannot be ignored (CRAFT v Pope and others)

Published on: 19 January 2022
Published by: LexisPSL
  • Directors’ duties and companies limited by guarantee—restriction on distributions in a company’s constitution cannot be ignored (CRAFT v Pope and others)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Pensions analysis: This decision will be of particular interest to company lawyers as it is a relatively rare decision of the Court of Appeal addressing the law relating to companies limited by guarantee. The context was an allegation by the company that its former directors/members had converted company property to their own use in circumstances in which the company’s constitution prevented distribution of its assets. The case turned on the merits of the director/members’ defences, which were based upon: an assertion that the interests of the company should be equated to the interests of the sole members/directors; attribution of the members/directors conduct to the company/ratification of that conduct by reason of the Duomatic principle by it; and section 39 of the Companies Act 2006 (CA 2006) and the scope of the abolition of the ultra vires doctrine. Each of these defences failed at first instance, and the judgment was upheld by the Court of Appeal. The decision also contains a separate section containing consideration of the Court of Appeal’s jurisdiction to re-open refusal of permission to appeal. Written by Lydia Seymour, barrister, Outer Temple Chambers. or take a trial to read the full analysis.

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