Company Law
Essays Page
Directors’ duties (1) 2
Directors’ duties (2) 8
Directors’ duties (3) 13
SLP (1) 18
SLP (2) 23
Minority protection (1) 28
Minority protection (2) 34
Minority protection (3) 40
Exam Paper 46
Marks and feedback provided – first-class answers
Only for reference purposes
1
, 2017 Q1
“Codification risks losing this adaptability (of the rules of precedent whereby courts can
develop and adjust equitable principles and common law rules) in exchange for the certainty
and accessibility of fixed statutory wording.” - Mayson, French & Ryan, Company Law, 27th
Edition 2011-1012, Oxford University Press.
Critically examine this statement with regard to Directors’ Duties under the Companies
Act 2006.
________________________________________________________________________
The codification of directors’ duties had previously been seen as the search for the Holy
Grail, as it would be virtually impossible to express in the words of a statute all the
intricacies and nuances of the general law, as noted by Mary Arden.
Research conducted on behalf of the Law Commission revealed broad support amongst
directors themselves for the codification of their obligations. The Government decided to
codify the duties of directors to make the law “consistent, certain, accessible and
comprehensible”. Lord Hodge in Eastford v Gillespie regarded the codification as
“intended to make those duties more accessible to commercial people.”
Directors are defined under s250 Companies Act 2006 (hereinafter CA 2006) as any person
occupying the position of director, by “whatever name called”. This definition, albeit
unorthodox at first glance, is expressed in a very appropriate way so as to encompass all
forms of directorship, whether de jure, de facto or shadow.
S170 gives statutory effect to Perceival v Wright and provides that directors owed duties to
the company and not shareholders. This means that the proper claimant is the company as
per Foss v Harbottle. It’s necessary for directors to act for the interests of future
shareholders, as held in The Savoy Hotel Limited and the Berkeley Hotel Company Limited.
Under s171, directors are under a duty to act in accordance with the constitution and for
proper purpose, which is exercise their discretion bona fide for the interest of the company.
This is based on ‘proper purposes doctrine’ from Re Smith & Fawcett. This duty usually
applied in relation to directors issuing shares, as seen in Hogg v Cramphorn Ltd and Howard
Smith v Ampol Petroleum Ltd, but is not confined to such decisions. It has been applied, for
example, to the power to refuse to register a transfer of shares as per Re Smith & Fawcett
Ltd, and to the power to enter into a management agreement as per Lee Panavision v Lee
2
Essays Page
Directors’ duties (1) 2
Directors’ duties (2) 8
Directors’ duties (3) 13
SLP (1) 18
SLP (2) 23
Minority protection (1) 28
Minority protection (2) 34
Minority protection (3) 40
Exam Paper 46
Marks and feedback provided – first-class answers
Only for reference purposes
1
, 2017 Q1
“Codification risks losing this adaptability (of the rules of precedent whereby courts can
develop and adjust equitable principles and common law rules) in exchange for the certainty
and accessibility of fixed statutory wording.” - Mayson, French & Ryan, Company Law, 27th
Edition 2011-1012, Oxford University Press.
Critically examine this statement with regard to Directors’ Duties under the Companies
Act 2006.
________________________________________________________________________
The codification of directors’ duties had previously been seen as the search for the Holy
Grail, as it would be virtually impossible to express in the words of a statute all the
intricacies and nuances of the general law, as noted by Mary Arden.
Research conducted on behalf of the Law Commission revealed broad support amongst
directors themselves for the codification of their obligations. The Government decided to
codify the duties of directors to make the law “consistent, certain, accessible and
comprehensible”. Lord Hodge in Eastford v Gillespie regarded the codification as
“intended to make those duties more accessible to commercial people.”
Directors are defined under s250 Companies Act 2006 (hereinafter CA 2006) as any person
occupying the position of director, by “whatever name called”. This definition, albeit
unorthodox at first glance, is expressed in a very appropriate way so as to encompass all
forms of directorship, whether de jure, de facto or shadow.
S170 gives statutory effect to Perceival v Wright and provides that directors owed duties to
the company and not shareholders. This means that the proper claimant is the company as
per Foss v Harbottle. It’s necessary for directors to act for the interests of future
shareholders, as held in The Savoy Hotel Limited and the Berkeley Hotel Company Limited.
Under s171, directors are under a duty to act in accordance with the constitution and for
proper purpose, which is exercise their discretion bona fide for the interest of the company.
This is based on ‘proper purposes doctrine’ from Re Smith & Fawcett. This duty usually
applied in relation to directors issuing shares, as seen in Hogg v Cramphorn Ltd and Howard
Smith v Ampol Petroleum Ltd, but is not confined to such decisions. It has been applied, for
example, to the power to refuse to register a transfer of shares as per Re Smith & Fawcett
Ltd, and to the power to enter into a management agreement as per Lee Panavision v Lee
2
