Company Law Directors Duties 1 Lecture 5
Directors Duties 1
Types of directors: Ordinary, de facto, shadow directors and non executive directors.
Table A section 80 is the cornerstone of corporate governance.
Gives the directors powers to act as they see fit for the benefit of the company.
Directors have a FIDUCIARY relationship with the company – trust and confidence. The distinguishing obligation of a fiduciary is the OBLIGATION OF LOYALTY.
Shadow directors – not appointed by the board – have a decisive say in managing from a distance. Other directors do not have to accept their advice – but must be ACCUSTOMED to doing so. It does not count if advice is being provided from a professional capacity.
Case Law: Fyffes plc V DCC – argued Flavin was a shadow director of DCC. HELD: not a shadow director.
A company can be a shadow director of another company.
Fyffes case: HELD that DCC was probably a shadow director of Lotus green.
De Facto directos: Act as directors without having been appointed – may be deemed to be a director and share their duties.
Shareholders cannot interfere with directors functions unless they alter the articles or remove the director. Directors can take decisions against the majority of shareholders. Articles give directors certain powers and shareholders cannot disregard these. But where NO SUCH POWERS ARE GIVEN, then shareholders can direct members to do or refrain from certain acts.
Case Law: Ryanair V aer lingus 2011 – owned 30%. Directors refused to table resolution. Held: Directors had ultimate authority.
Members resume control when: No capable directors can act. (no official directors, directors become deadlocked, refuse to discuss business matters etc.)
When directors exceed their authority: - up to the shareholders to ratify action or take action against director.
Case Law: Bamford V Bamford – Director allots shares for an IMPROPER PURPOSE. Shareholders could ratify the decision or make him pay for the shares.
Leading Irish authority on shadow directors: Case law:
Types of directors: Ordinary, de facto, shadow directors and non executive directors.
Table A section 80 is the cornerstone of corporate governance.
Gives the directors powers to act as they see fit for the benefit of the company.
Directors have a FIDUCIARY relationship with the company – trust and confidence. The distinguishing obligation of a fiduciary is the OBLIGATION OF LOYALTY.
Shadow directors – not appointed by the board – have a decisive say in managing from a distance. Other directors do not have to accept their advice – but must be ACCUSTOMED to doing so. It does not count if advice is being provided from a professional capacity.
Case Law: Fyffes plc V DCC – argued Flavin was a shadow director of DCC. HELD: not a shadow director.
A company can be a shadow director of another company.
Fyffes case: HELD that DCC was probably a shadow director of Lotus green.
De Facto directos: Act as directors without having been appointed – may be deemed to be a director and share their duties.
Shareholders cannot interfere with directors functions unless they alter the articles or remove the director. Directors can take decisions against the majority of shareholders. Articles give directors certain powers and shareholders cannot disregard these. But where NO SUCH POWERS ARE GIVEN, then shareholders can direct members to do or refrain from certain acts.
Case Law: Ryanair V aer lingus 2011 – owned 30%. Directors refused to table resolution. Held: Directors had ultimate authority.
Members resume control when: No capable directors can act. (no official directors, directors become deadlocked, refuse to discuss business matters etc.)
When directors exceed their authority: - up to the shareholders to ratify action or take action against director.
Case Law: Bamford V Bamford – Director allots shares for an IMPROPER PURPOSE. Shareholders could ratify the decision or make him pay for the shares.
Leading Irish authority on shadow directors: Case law: