ABSTRACT
9.1 Traditionally, in the United Kingdom, directors’ duties have been fragmented comprising regulatory and self-regulatory mechanisms. The regulatory approach, which ensured that directors complied with their duties and obligations, had been random, embracing fiduciary duties, the common law duty and statutory duties imposed on directors under various legislation including the CA 1985; the Company Directors’ Disqualification Act 1986; the Insolvency Act 1986; and the Financial Services and Markets Act 2000. Although not binding, the self-regulatory mechanisms such as the UK Listing Rules and City Code on Takeovers and Mergers, ensured that corporate control and power were exercised responsibly in the interests of shareholders and stakeholders. Legally directors are obliged to act in the best interests of the company. The law ensures that the controllers within the corporation have the authority to act and make decisions on the company’s behalf under the powers vested in them by the company’s constitution and the authority delegated by shareholders to directors to conduct the day-to-day management of the company; that there are established governance structures setting out the hierarchy of decision making within corporations. Those who have the power to make decisions must do so within the confines of the authority under the company’s constitution. Although case law on directors’ duties is well established in the form of fiduciary and common law duties, the legal effectiveness of the corporate governance system was hindered where directors were not fully appraised of their legal obligations owing to the fragmented nature of directors’ duties, which made it difficult for directors to clearly find and understand the law that applied to them.
