The loan by SPFL to WRFL and SPFL’s guaranteeing of WRFL’s bank loan as well of the management of WRFL are all assessed by reference to directors’ duties as delineated in Sections 170-177 of the Companies Act 2006. Generally, directors’ are responsible for managing the…
The loan by WRFL to SPFL and the guaranteeing of SPFL’s bank loan by WRFL raises the issue of director’s duties to creditors and shareholders. Had SPFL not been experiencing some financial difficulties, there would have been no duties to consider. Creditors typically have no status jointly or severally with respect to companies that are solvent.4 However, when a company is suffering difficulties or is insolvent the position is quite different. Moreover, while creditors will not be able to sue a solvent company for mismanagement, directors do have a duty to safeguard the interests of creditors. As Lord Templeman stated in Winkworth v Edward Baron Development Co. Ltd:
A duty is owed by directors to the company and to the creditors of the company to ensure that the affairs of the company are properly administered and that its property is not dissipated or exploited for the benefit of the directors themselves to the prejudice of the creditors.5
In addition to owing a duty to creditors to safeguard against the mismanagement of the company’s property and assets, Section 172 (3) of the Companies Act 2006 carries the duty to creditors a bit further. This further duty is found in the duty to promote the success of the company for its members6 which is subject to the any law that requires directors “in certain circumstances to consider or act in the interests of creditors of the company”.7 Even so, the duty toward creditors is not such that directors are required to act in the best interest of creditors but merely to ensure that action taken would not leave creditors more disadvantaged than they would be upon liquidation.8
The overall duty of directors to act in the best interests of the company and its members generally includes the duty to act in the best interests of its shareholders.9 The duty to shareholders and creditors as described so far ...
Cite this document
(“Company law Essay Example | Topics and Well Written Essays - 4000 words”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/396524-company-law
(Company Law Essay Example | Topics and Well Written Essays - 4000 Words)
“Company Law Essay Example | Topics and Well Written Essays - 4000 Words”, n.d. https://studentshare.net/miscellaneous/396524-company-law.
The study helps to analyze the legal matters associated with the companies act and to distinguish between situations under which a person serving for the organization are held guilty and in situations where he is simply let off. It can concluded that the court of Law is very much strict with matters of fraud and punishes the convict and provides him with no opportunity to hide behind the reasons of serving his obligation for the company.
This paper seeks to perform an IRAC analysis of fraudulent phoenix activity, whereby the issue, rule, analysis, and conclusion will be made. Issue Australian corporate law has always sought to reinforce commercial and entrepreneurial risk taking, since these are essential to the creation of wealth, as well as the continuous functioning of the market (Adams, 2012).
Note however, that the arbitration system and enforcement capacities also have a role to play as far as business law is concerned. Under this sphere are the commercial courts and the specialized economic courts. They come in when transactions between parties are not honored.
The law outlines that directors cannot receive any benefit from their position, unless they obtain an express legal authority from the board to do so. The Companies Act outlines that a director of a company must to circumvent situations in which the director possess, or can manifest an express or indirect interest that diverges of may clash with the interests of the company.
It has been enforced with the intention to govern the operations of the corporate houses of the country and instructs them to operate with the best interest of all the stakeholders involved with them1. As per the Company Law, it is commonly admitted that company is a separate legal entity which advocates that the members of the company are distinct from the corporate body.
It is particularly owing to the fact that the extension of the case led to the foundation of the Salomon principles in relation to Company Law related statutes. The principle, in simple terms, implies that the company has been legally incorporated and accordingly it should be considered as an independent person with certain specific rights along with liabilities to guide its operations.
g 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. The law also recognises the concept of shadow director, which is defined by section 251.
In the shareholder-centred view
When legal provisions that govern the interaction of employers and employees are violated, or when either party fails to meet their legal obligations, lawsuits are highly likely to occur. In the Chandler v Cape plc  EWCA 525 case, a health and safety issue resulted in a
In other words, this verdict has provided a veil between an owner and a company and through this veil the owner would not be personally blamed or persecuted if corporate actions have been taken on behalf of the company; Thereby, the company would itself be
10 Pages(2500 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Company law for FREE!