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BUSINESS LAW – COMPANY LAW (lecture 10) – EXTRA
Duty to promote success of co s172(1)(a)-(f)–A director of a co must act
in the way he considers, in good faith,
would be most likely to promote the
success of the co for the benefit of its
members as a whole and in doing so have
regard (amongst other matters) to
consequences of decisions, co’s
employees, relationships with
suppliers/customers, impact of the co’s
operations on the community and the
environment; co’s reputation; act fairly
...

Enlightened shareholder value
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*Internal Management rule – in
discharging this duty and in particular,
taking account of the factors listed in
subsection 1, directors are bound to
exercise reasonable care, skill and
diligence
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*s417(2) requires that the directors’
business review inform members of the co
and help them assess how the directors
have performed their duty under s172
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*s175(4)-This duty is not infringed if the situation cannot
reasonably be regarded as likely to give rise to a conflict of
interest; or if the matter has been authorised by the
directors
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*A corporate opportunity is viewed as an asset of the co,
which may not therefore be misappropriated by the
directors – Cook v Deeks
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*Aberdeen Rly Co v Blaikie Bros – personal goals v
professional = conflict of interests
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*Emphasising need for disclosure &
loyalty
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*s176-A director must not accept a benefit from a third
party conferred by reason of his being a director or his
doing (or not doing) anything as a director
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Cases within more than one of the general duties

Duty to exercise independent jment –
s173

*The way in which the duties are framed results in an
overlap between them
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*Section 179 serves to emphasise that the effect of the
duties is cumulative
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*Prohibition on the fettering of discretion
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*Secret profit can be claimed by the co
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*Duties apply equally to executive and
non-executive directors
*Object test – Dorchester Finance v
Stebbing

*If director has interest in an transaction, the co can make
contract voidable
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