Child & Child have a wealth of experience of advising companies and directors on their fiduciary duties. The introduction of the Companies Act 2006 codified directors’ fiduciary duties which were previously equitable and common law duties. Directors now have general duties including the following:
- To act within their powers
- To promote the success of the company
- To exercise independent judgement
- To exercise reasonable care, skill and diligence
- To avoid conflicts of interest
- Not to accept benefits from third parties; and
- To declare an interest in a proposed transaction or arrangement
The above duties are owed to the company and only the company may enforce them. However, in certain cases, shareholders of the company may bring a derivative action on the company’s behalf. The company has a number of remedies available to it in the event a director breaches one or more of his fiduciary duties which include:
- An injunction
- Setting aside the transaction, restitution and an account of profits; and
- Restoration of company property held by the director
The court may provide relief to a director for an action brought against him for negligence, breach of duty or breach of trust if the court considers that the director acted honestly and reasonably and he ought to be fairly excused.
Please telephone James Beat on 020 7201 3553 or Dipesh Dosani on 020 7201 3575.