2. Scope and Nature of the General Duties
2.1 Which directors?
The general duties will apply to all the directors of a company. "Director" is defined to include any person occupying the position of director, by whatever name called (section 250), which will include a de facto director (a person who acts as a director without having been validly appointed). Whether the general duties apply to a shadow director (that is, a person in accordance with whose directions or instructions the directors of the company are accustomed to act) will depend on his or her functions.
The Act makes no distinction between executive and non-executive directors.
2.2 Duties owed to the company
The codified duties are owed to the company. Only the company will be able to enforce them but this will include administrators and liquidators. In addition, in certain circumstances, shareholders may be able to bring a derivative action on the company's behalf (see below, Action by the company).
2.3 Cumulative duties
Where more than one duty applies in a given case, you must comply with each and every applicable duty. For example, the duty to promote the success of the company will not authorise you to breach your duty to act within your powers, even if you consider that action would be most likely to promote the success of the company. The general duties also do not require or authorise a director to breach any other law.
2.4 Relationship between the common law and equitable duties and the new general duties
The 2006 Act does not contain all the necessary details on directors' duties, and common law rules and equitable principles will need to be considered in interpreting and applying the general duties.
It should also be noted that the codification is not exhaustive. Directors will continue to owe certain equitable and common law duties to the company, such as:
• The duty of confidentiality.
• The duty to consider or act in the interests of creditors when the company is insolvent.
If you have any question on any of those matters, or on any of the matters covered below, whether now or in the future, you should contact David Heys at Lawson-West on 0116 212 1027 or by email at dheys@lawson-west.co.uk.
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