Directors Duties
We have substantial experience in assisting directors in dealing with claims being bought against them for breaching the fiduciary duties they owe to the company, creditors and shareholders.
In the UK, a director's duty is to manage the company's day-to-day operations for the maximum benefit of its shareholders. A director's ownership stake in the company doesn't change this duty. As a result, directors often face criticism for the decisions they make and how those decisions affect the business and its shareholders.
Prior to the Companies Act 2006, director's duties were based on the outcome of court cases and the decisions made by judges who sit in the courts of England & Wales. The rulings and commentary from these judges created principles that became known as directors' fiduciary duties.
These judicial decisions confirmed that directors had to follow certain principles when making decisions for their companies:
- Objectivity
- To be based on the original basis of the company when set up
- Independence
- Good management.
The process of defining directors' duties changed with the Companies Act 2006, which, for the first time, explicitly laid out the duties a director must follow instead of relying on court interpretations.
When we're instructed to review a potential claim, we approach every case the same way, whether it's brought by liquidators, shareholders or creditors. We start by reviewing with you the position as to the potential claim, its strengths and weaknesses and, just as importantly, your ability to respond.
We believe it is crucial to quickly assess your potential defence, any possible recovery and the likely costs involved (including both our costs and the other side's potential expenses). This allows us to discuss the commerciality of your situation so you can make a fully informed decision. We can then decide whether to proceed to a final hearing or focus on negotiating the best possible settlement as soon as possible.
Our team's extensive experience handling claims concerning a director's fiduciary duties is often the key to achieving the outcomes our clients desire. By representing directors, insolvency practitioners, and shareholders, we've gained a deep understanding of the arguments used by all parties. We use this insight to secure the most favourable results possible for our clients.
