Company law Dissertation Example | Topics and Well Written Essays - 14250 words

Company law - Dissertation ExampleSuch intrusion takes place, unaccompanied when it is evident that there is mala fide intent in the decisions of the directors. This is in accordance with section 306 of the Companies execute 2006. Although, section 172(1) of the Companies arrange 2006 influences the general duties of the directors of a company it has been seen to result in legal uncertainty, regarding their general duties. This is due to the absence of an everlasting(a) list of the duties to be discharged by the directors. Apparently, this bestows widespread discretionary powers upon directors. This wide discretion has been provided by the command for the purpose of conducting the affairs of the company in a congenial manner. However, under certain circumstances, such discretionary power can be misused by the directors of a company, in order to further their individualized interests. This had transpired in Hawkes v Cuddy & Others.1 A codification of some of the duties of the directors of a company was effected by the Companies Act 2006. Instances are the codification of the park law duty of care and skill, by section 174(1) of the Companies Act 2006. A very important feature of the codification of directors duties relates to the fact that not all of the directors duties have been codified.2Directors duties codified by the Companies Act 2006 are their principal fiduciary duties and the duty of care and skill. ... ector is required to comply with all of these duties.3 It is discernible from the various law reports that section 172 of the Companies Act 2006, merely effects a codification of the obligations of directors under the common law. In Re Southern Counties Fresh Foods Ltd,4 the court made a comparison between the precedent wording and the new form after codification.5Prior to the 2006 Act, there was no material difference in this position. This was thin in Re Smith and Fawcett Ltd.6 The shareholders of a company can sue a director of their comp any, for collapse of duty towards the company.7 Prior to the enactment of the Companies Act 2006, shareholders had to obtain the leave of the board of directors of their company, if they were desirous of initiating legal proceeding against a director of their company. This inequitable situation was rectified to some extent, subsequent to the enactment of the Act, which permits shareholders to bring in derivative action against a director of their company. It is no longer necessary to obtain the prior permission of the board of directors of the company, to bring such derivative action. The business judgement rule absolves directors of liability for the decision taken by them, if these decisions had been taken in good faith, with due care and within their powers.8 A directors liability will be absolved, if he had taken the concerned decision with due care and diligence. However, there is every possibility that the director may exceed the limits of his authority, in taking such dec isions. In Lonrho Ltd v Shell Petroleum Co. Ltd 9, the House of Lords stressed upon the importance of the duty of directors towards the company. In Re Horsley & Weight Ltd 10 it was held that the directors owed a duty towards creditors. This was a novel