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The Companies Act 2006 provides a statutory statement of Directors’ duties. A Director who is in breach of their duty is personally liable to compensate the company for any loss suffered as a result of the breach. In some circumstances, a Director may be liable to disqualification under the Company Directors Disqualification Act 1986.
It's important that Directors understand their responsibilities and potential liabilities under the Act. Our Regulatory Compliance & Defence Solicitors can advise Directors and provide legal representation in any application to disqualify.
Companies Act 2006 General Duties include:
• A duty to act within powers, as contained in the company’s memorandum and articles of association, and to only exercise their powers for the purposes for which they are intended
• A duty to promote the success of the company, by acting for the benefit of its members as a whole
• A duty to exercise independent judgment
• A duty to exercise reasonable care, skill and diligence. If a Director has specialist skills or knowledge, this is taken into account when considering the onus of the duty
• A duty to avoid conflicts of interest, which means that any potential conflict should be disclosed immediately so the conflict can be removed or authority can be given for the conflict
• A duty not to accept benefits from third parties, if the benefit is regarded as likely to give rise to a conflict of interest.
In some instances, a Director’s liability under the Act remains even after they cease to be a Director and all of the duties apply to non-executive and shadow directors, as well as Executive Directors.
Slater and Gordon Lawyers offer expert advice and can provide immediate legal representation anywhere in the UK.
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