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directors' duties


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Obligations owed by a director of a company. The purpose of such duties, which are based on the common law and equitable principles, is to safeguard the interests of the company. The duties are owed to the company (Companies Act 2006 s 170) and apply also to shadow directors to the extent provided for by common law or equitable principles (s 170(5). The Companies Act sets out seven “general” duties: the duty to act within the powers of the company's constitution and to exercise the powers for the purposes for which they are conferred (s 171); the duty to act in good faith to promote the success of the company for the benefit of its members as whole (s 172); the duty to exercise independent judgment (s 173); the duty to exercise reasonable care, skill, and diligence (s 174); the duty to avoid conflicts of interest (s 175); the duty not to accept benefits from third parties (s 176); the duty to declare an interest in any proposed transaction or arrangement with the company (s 177).

the duty to act within the powers of the company's constitution and to exercise the powers for the purposes for which they are conferred (s 171);

the duty to act in good faith to promote the success of the company for the benefit of its members as whole (s 172);

the duty to exercise independent judgment (s 173);

the duty to exercise reasonable care, skill, and diligence (s 174);

the duty to avoid conflicts of interest (s 175);

the duty not to accept benefits from third parties (s 176);

the duty to declare an interest in any proposed transaction or arrangement with the company (s 177).

Subjects: Law.


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