ABSTRACT
The most likely area for questions solely on directors is that of the extent of their statutory duties. Prior to the passing of the CA 2006, these duties were based on case law, but it is expected that they will be interpreted and applied in the same way as the common law rules and equitable principles (s 170(4) CA 2006). Students must not become too narrow minded in addressing the issue of directors’ duties. For example, a question may require consideration of a contract between a director and the company – obviously, the usual rules on disclosure, the nature of the disclosure and the effect of non-disclosure (including possible ratification) arise, but students must also consider the nature of the contract. Ask yourself whether the transaction is a substantial property transaction (s 190 CA 2006) or whether it involves a loan, etc (ss 190-214 CA 2006) or a service contract (s 188 CA 2006). Entry into a contract may also be attacked as an improper use of directors’ power. Any question on directors’ duties may raise the issue of locus standi; is the person seeking to sue the director authorised to do so? Locus involves the case of Foss v Harbottle (1843), its
exceptions and the derivative claim procedure of Part 11 CA 2006, and it may be that a litigant denied locus on behalf of the company has an alternative remedy under s 994 CA 2006 or 122(1)(g) of the Insolvency Act 1986.
