Company Law Essay Example | Topics and Well Written Essays - 2500 words - 3

Company Law - Essay Example 1 Alistair Darling, Secretary of State of the Department of Trade and Industry said that while most of the provisions of the Companies Act 2006 will be in force by October next year the entire Act will be in force by October of 2007.2 While the Companies Bill 2006 introduces some new aspects to company law, it might have left the regulations of directors’ duty up to judicial interpretation and company law. The general impression is that the 2006 Bill does nothing much to improve on the director’s duties as enunciated under the provisions of the Companies Act 1985. 3- The Companies Bill 2006 tightens the Directors’ duties in respect of due diligence by broadening the rights of shareholders to ‘sue directors for negligence and other defaults and rights to bring derivative claims on behalf of the company in certain circumstances.’3 Under the provisions of the Companies Act 1985, together with principles of Common Law and Equity, directors have a fiduciary relationship with the company they serve. In their capacity as fiduciaries, directors have three primary duties in respect of the management of the company’s affairs. They are: In Re City Fire Equitable Insurance Co., Romer J added that in the course of exercising his duties as a director, the director was subject to a certain standard in law. That standard he went on to explain was the reasonable skill and care that was generally expected of a business man possessing the relevant skills and training.5 Moreover the common trend in the application of Common Law and Equitable principles was to impose the duty on the directors’ in respect of the company itself rather than in respect individual shareholders. In fact Section 309 of the Companies Act 1985 codified this proviso by requiring that directors owe a duty of care to act in the best interests of both the members and the employees of the company.6 Although this duty necessarily