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 statutory duties of a director set out in sections 171 to 177 of the Companies Act 2006 (CA 2006), 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, for example, a director should also be mindful of: • other duties they may have under CA 2006, such as the duty to call meetings required by members or the duty to keep accounts • 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) • potential liabilities under environmental

Directors are the agents of a company who manage its day-to-day business and owe a number of duties to it. The Companies Act 2006 (CA 2006) codified for the first time certain common law and equitable duties that had been developed by the courts over hundreds of years and also modified company law in certain areas. CA 2006, ss 171–177 set out the statutory duties (the general duties) owed by a director to their company: • the duty to act in accordance with the company's constitution and only exercise powers for the purposes for which they are conferred • the duty 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 (duty to promote the success of the company). Pursuant to the Companies (Miscellaneous Reporting) Regulations 2018, SI 2018/860, companies that have to prepare a strategic report will need to include a separately identifiable statement

The duty to promote the success of the company is one of the general duties owed to a company by its directors under the Companies Act 2006 (CA 2006). For an introduction to the general duties, see Practice Note: Directors' duties—fundamentals. The duty to promote the success of the company requires a director to act in the way they consider, 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 (among other matters) to: • the likely consequences of any decision in the long term • the interests of the company's employees • the need to foster the company's business relationships with suppliers, customers and others • the impact of the company's operations on the community and the environment • the desirability of the company maintaining a reputation for high standards of business conduct, and • the need to act fairly as between members of the company Additionally,

Restructuring & Insolvency analysis: The High Court considered claims brought by the assignee of two companies' causes of action against a director for breach of fiduciary duty and misuse of company assets. The court held that operating an unauthorised director's loan account by charging personal expenses to the company without shareholder approval amounted to a fraudulent breach of fiduciary duty, despite an intention to repay the sums drawn. It also found that the purported sale of a company asset to the director's mother at a substantial undervalue was an unauthorised disposal in breach of the fair dealing rule, and awarded equitable compensation. However, the claimant was confined to pursuing only those claims expressly assigned under the deed of assignment. The judgment provides important guidance on the meaning of 'fraud' in fiduciary duty claims, the burden of proof when directors receive company assets, the construction of assignments in insolvency, and the application of the fair dealing rule to transactions involving a fiduciary's close relatives. Produced in partnership with Katherine Traynor, barrister at Landmark Chambers.

Insolvency analysis: The disqualification action by the Secretary of State against the former directors of Farepak and its parent, European Home Retail Limited has collapsed, and the High Court said there was no justifiable complaint against the company’s directors. Farepak’s collapse was, said the court, partly due to the 'hardball' attitude of HBOS. Richard Highley and Philippa Ellis of DAC Beachcroft LLP explain how the case has highlighted some of the flaws that may be faced by a defendant director in cases brought against them under the Company Directors Disqualification Act 1986 (CDDA).

STOP PRESS: A significant restructuring of the UK listing regime came into effect on 29 July 2024 which included the removal of the premium and standard listing segments and the creation of a single listing category for equity shares in commercial companies. The commercial companies category is heavily disclosure-based and sits alongside other listing categories such as the shell companies, secondary listing and closed ended investment fund categories.  A new UK Listing Rules sourcebook came into force to implement the changes and the previous Listing Rules sourcebook was revoked. For further information see Practice Note: Reform of the UK listing regime—fundamentals  This Practice Note and training slides reflect the listing regime as it was prior to 29 July 2024. These training materials consist of template

An insurance policy taken out by or on behalf of a company's directors and officers to cover against liabilities that could arise as a result of acts or omissions carried out by the directors and officers during the course of the company's business.

The directors of a company are responsible for its day to day management. The directors are given that responsibility and power to make decisions of behalf of a company by its articles of association, the Companies Act 2006 (CA 2006), common law and any relevant members’ resolutions. In turn, the directors are limited by any restrictions in a company's articles, the CA 2006 (in particular, directors' duties and any matters reserved for the approval of its members), common law and any relevant members’ resolutions. Unlike those relating to decision-making by a company’s members (which is done through resolutions passed in writing or at a general meeting or an annual general meeting), there are no provisions in the CA 2006 dealing with decision-making by a company’s directors. In particular, there are no provisions that deal with meetings by its board of directors (board meetings). The framework for decision-making by directors must be set out in a company’s articles. A large company that has adopted a corporate governance code, such as the UK Corporate Governance Code (UKCG Code) of the

This Practice Note examines typical conduct at board meetings, and considers the role of the chair in presiding over board meetings, quorum and voting requirements under the model articles for private companies limited by shares and model articles for public companies limited by shares (Model Articles), declaring interests in transactions, adjournment and the importance of board papers and debate at meetings. It also considers corporate governance requirements under the 2024 UK Corporate Governance Code (2024 UKCG Code). For details on the power and authority of directors to make decisions, whether as a full board or as part of a committee, directors’ duties considerations when making decisions, and decision-making in group companies, see Practice Notes: Directors’ board meetings—fundamentals and Directors’ decision-making—power, authority and duties. For details on calling board meetings, including giving notice, content requirements of notices, attendance and attendees at board meetings, see Practice Note: Directors’ decision-making—convening board meetings. See also Practice Note: Directors’ decision-making—post board meeting formalities for an examination of preparing board minutes and administrative requirements following board meetings. For details on decisions

This Practice Note considers how directors convene board meetings under the model articles for private companies limited by shares and public companies limited by shares (Model Articles). It covers giving notice, content requirements of notices, attendance and attendees at board meetings. It also considers corporate governance requirements under the UK Corporate Governance (UKCG) Code. For details on the power and authority of directors to make decisions, whether as a full board or as part of a committee, directors’ duties considerations when making decisions, and decision-making in group companies, see Practice Note: Directors’ decision-making—power, authority and duties. For information on typical conduct at board meetings, including the role of the chair, quorum and voting requirements, declaring interests in transactions, consideration of board papers and debate, see Practice Note: Directors’ decision-making—conduct at board meetings. See also Practice Note: Directors’ decision-making—post board meeting formalities for an examination of preparing board minutes and administrative requirements following board meetings. For details on decisions taken by using the written resolution method and for decision-making by sole directors, see Practice Note: Directors’ decision-making—written

The directors of a company are responsible for the day to day management of that company. Its directors are given that responsibility and powers to make decisions of behalf of the company by its articles of association, common law and any relevant resolutions of the company's members. These powers are limited by any restrictions or limitations in the company's articles, the directors' duties set out in the Companies Act 2006 (CA 2006) and any matters reserved to its members by CA 2006 (eg member approval is required where the company is entering into certain transactions with directors). Unlike those relating to decision-making by a company’s members (through resolutions passed in writing or at a general meeting or annual general meeting), there are no provisions in CA 2006 dealing with decision-making by a company’s directors. A large company that has adopted a corporate governance code, such as the UK Corporate Governance Code (UKCG Code) of the Financial Reporting Council (FRC) or the Corporate Governance Code produced by the Quoted Companies Alliance (QCA), will be subject to its provisions

This Practice Note considers the power and authority of directors to make decisions, whether as a full board or as part of a committee. It also considers directors’ statutory duties in discharging their obligations when taking decisions and specific considerations for group companies which have common directors. For details on calling board meetings, including giving notice, content requirements of notices, attendance and attendees at board meetings, see Practice Note: Directors’ decision-making—convening board meetings. For information on typical conduct at board meetings, including the role of the chair, quorum and voting requirements, declaring interests in transactions, consideration of board papers and debate, see Practice Note: Directors’ decision-making—conduct at board meetings. See also Practice Note: Directors’ decision-making—post board meeting formalities for an examination of preparing board minutes and administrative requirements following board meetings. For details on decisions taken by using the written resolution method and for decision-making by sole directors, see Practice Note: Directors’ decision-making—written resolutions and decisions by sole directors. Power and authority to make decisions The directors of a company are responsible for the day to day management