This Practice Note outlines the written resolution method directors may adopt to take decisions instead of holding board meetings. It also considers how sole directors make decisions under the model articles for private companies limited by shares. 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 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. Also see Practice Note: Directors’ decision-making—post board meeting formalities for an examination of preparing board minutes and administrative requirements following board meetings. Written resolutions Rationale for using the written resolution method The

Why do the directors need to conduct due diligence? When taking steps to prepare a company for winding-up, a number of matters need to be addressed. This Checklist sets out some of the matters the directors should investigate prior to swearing a statutory declaration of solvency for the purpose of placing a company into members’ voluntary liquidation. A full enquiry of the company’s assets and liabilities must be carried out so that the directors can satisfy themselves that the company will be able to pay its debts in full, together with interest at the official rate, within no more than 12 months from the commencement of the winding-up. This issue becomes paramount where an early distribution of assets to members takes place, as any unexpected liabilities could lead to claims being made against the company and possibly the liquidator. Therefore, the liquidator may require shareholders to provide an indemnity, particularly if an early distribution of assets to members is made. For

The duties of directors owed to the company specifically as set out in CA 2006, ss 171–177, typically referred to as the ‘general’ or ‘statutory’ duties. While not the only duties owed by a director to the company, they are a codification of the main fiduciary and equitable duties that have been developed and refined by the courts over many centuries.

These training materials consist of template PowerPoint slides that can be used as the basis of one or more training seminars in relation to directors’ duties and liabilities, in particular the general duties under Part 10 of the Companies Act 2006 (CA 2006). The training materials will assist legal advisors, company secretaries, company members and directors to gain an understanding of the key directors’ duties and liabilities, and provide a link to other useful materials and guidance. It is anticipated that those providing training will use these slides as a helpful starting point for their presentations and

General duties under the Companies Act 2006 Section 172(1) of the Companies Act 2006 (CA 2006) creates a general duty on a director to: ‘… act in the way he 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 (amongst other matters) to— (a) the likely consequences of any decision in the long term, (b) the interests of the company's employees, (c) the need to foster the company's business relationships with suppliers, customers and others, (d) the impact of the company's operations on the community and the environment, (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly as between members of the company.’ As can be seen, there is no specific obligation on directors to consider health and safety in the running of the

Dispute Resolution analysis: The Court of Appeal considered when a director’s pursuit of corporate opportunities after the breakdown of a quasi-partnership property development business may amount to unfair prejudice. The central issue was whether the director remained obliged to account for development opportunities pursued through new companies, where those opportunities were sufficiently connected with the relevant Group companies’ business, assets or maturing projects. The court held that the trial judge had been wrong to treat the relevant companies’ inability to exploit those opportunities as a answer to a claim for breach of fiduciary duty and to account for any profits. However, the court distinguished between an existing corporate opportunity which had already matured within the business of one of the Group companies and a genuinely future opportunity arising after the venture had ended. Only one project was held capable of giving rise to actionable unfair prejudice, subject to further findings. The case provides important guidance on the interaction between directors’ fiduciary duties, the no-profit rule, insolvency considerations and relief under section 994 of the Companies Act 2006 (CA 2006, s 994).

General duties of directors The Companies Act 2006 (CA 2006) codifies most, but not all, of the duties imposed on directors by case law and equitable principles. There are seven general statutory duties: • the duty to act within their powers • the duty to promote the success of the company for the benefit of its members as a whole • the duty to exercise independent judgment • the duty to exercise reasonable care, skill and diligence • the duty to avoid conflicts of interest • the duty not to accept benefits from third parties, and • the duty to declare interest in a proposed arrangement or transaction For further reading, see Practice Notes: • Fiduciary duties of directors • Directors' duties—fundamentals • Directors' duties—nature, scope, interpretation and application • Directors' duties—directors' conduct: CA 2006, ss 171–174 • Directors' duties—directors' interests: CA 2006, ss 175–177 • De facto and shadow directors Duties of directors of companies in financial difficulties When a company is financially distressed and formal insolvency proceedings become

Restructuring & Insolvency analysis: The High Court has dismissed a claim brought by an assignee of creditors' debts against individuals who were directors of a company in liquidation and a second company which was operating under a prohibited name pursuant to section 216 of the Insolvency Act 1986 (IA 1986). The defendants successfully argued that the second company fell within ‘The Third Excepted Case’ under the Insolvency Rules 2016 (IR 2016), SI 2016/1024, r 22.7, and that the second company had been known by its name for the entire 12 months prior to the first company's liquidation and had not at any time in those 12 months been dormant. The case is thought to be the only reported case on the true meaning and effect of the second of the two elements of The Third Excepted Case and demonstrates that the principles of corporate accounting law on non-dormancy cannot be translated from an accounting to an insolvency scenario. The concept of phoenix syndrome and the principle against doubtful penalisation were also considered. Written by Laura Newbery, legal director at Addleshaw Goddard LLP.

The CA 2006 requires any provision in a director's service contract under which the guaranteed term of the director's employment is, or may be, longer than two years, to be subject to approval by the members of the company. Listed companies are also subject to the Listing Rules and to the UKCG Code, which impose an additional layer of regulation in relation to directors’ service contracts.

The Companies Act 2006 (CA 2006) requires any provision in a director's service contract under which the guaranteed term of the director's employment is, or may be, longer than two years to be subject to approval by the members of the company. Approval is required as long term service contracts with directors are arrangements which are generally considered to be particularly open to abuse. The relationship between the statutory provisions requiring approval of such a provision and the general duties of a director that are set out in statute is discussed in Practice Note: Directors' duties—fundamentals. The term ‘director’, for the purpose of these statutory provisions, includes any person occupying the position of director, by whatever name called (ie whatever the official title used), and a shadow director. A company must observe various other statutory requirements In relation to directors’ service contracts, see in particular Practice Note: Directors’ service contracts—retention, copying and inspection. Companies with a listing of equity shares in the equity shares (commercial companies) category on the Official List of the London Stock

Company directors are not, by virtue only of their office as director, automatically entitled under company law to remuneration for services as a director or to reimbursement of expenses incurred in rendering such services. Power to pay directors remuneration for their services will need to be conferred by the constitution of the company. A director may also be contractually entitled to remuneration by virtue of an agreement or arrangement with the company. When considering the position in relation to the remuneration of a director under the Companies Act 2006 (CA 2006) and a company's articles of association, and how this relates to the remuneration provisions in directors’ service contracts and other contractual arrangements, it is important to note the distinction between: • a director's entitlement to remuneration (usually referred to as directors' fees) and reimbursement of expenses under the articles of association of the company, and • a director's contractual entitlement to remuneration by virtue of an agreement or arrangement with the company, most commonly a service contract (ie a contract of employment), a contract for services or a letter of

This Practice Note covers the statutory, regulatory and corporate governance framework for directors’ remuneration reports (including the directors’ remuneration policy), and related practical guidance. Law and regulation The Companies Act 2006 (CA 2006) and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, SI 2008/410 (2008 Regulations) impose requirements on the directors of a quoted company to disclose prescribed details of directors' remuneration in a remuneration report to be prepared annually. CA 2006 defines a quoted company as a UK company whose shares are either listed on the Official List of the London Stock Exchange or in an EEA state or admitted to dealing on the New York Stock Exchange or NASDAQ. AIM, AQSE Growth Market (formerly NEX Exchange Growth Market) and overseas companies are not covered by the directors' remuneration reporting regulations. Companies (both UK and overseas) with a listing of equity shares in the equity shares (commercial companies) category on the London Stock Exchange (listed companies) are also subject to requirements relating to remuneration reports in: • the UK Listing Rules (UKLRs) of the Financial