Company Director - Essay Example

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Company Director

Normally, the directors of a company are not required to own any of its shares. Economists have analysed the problems, which may arise when the people managing a business do not own all of it. Managers in this position are believed to manage the business less efficiently than if they did own it.1
In broad terms the duties can be distilled into three propositions: Firstly, directors are under a duty to act bona fide in the interests of the company. Secondly, to exercise their powers under company's constitution for the proper purpose. Finally, to avoid conflict of interests and to profit from their position. For the first time, however, all the duties owed by directors to their company have been set out in statute, in Part 10 (ss.170-177) of the CA 2006.
Section 171 of Companies Act 2006 states that duty to act within powers. A director of a company must (a) act in accordance with the company's constitution, and (b) only exercise powers for the purposes for which they are conferred.
The constitution of the company is one or more documents setting out the rules by which the company is to be operated. ...Show more


Before attempt to discuss this question it need to say that Companies Act 2006 does not contain a specific definition of the term "director". However, there is a general provision in section 250 of CA 2006, which states that the expression "director" includes "any person occupying the position of director, by whatever name called", which includes a person who is treated by the board as such despite not having been validly appointed…
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