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Code shows directors' duties to company
COMPANY directors need to be aware of changes in the law introduced at the end of 2007 which lay down clear duties - according to Andover solicitors Bonal-lack and Bishop.
The new law is partly derived from old case law but now sets out in a clear code the duties which directors owe to the company.
The seven general duties are as follows:
To act in accordance with the company's constitution;
To promote the success of the company for the benefit of its members;
To exercise independent judgement; To use reasonable care, skill and diligence (previously the duty was to use care and skill);
To avoid conflicts of interest except where they arise out of a proposed transaction or arrangement with the company; Not to accept benefits from third parties; To declare to other directors any interest a director has in a proposed transaction involving the company.
The law is now much clearer and requires much more transparency on the part of directors to protect the interests of other company members.
And the law now gives shareholders the right to sue directors in the company's name.
10:26am Thursday 17th April 2008
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