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Questions and Answers
What is the main issue highlighted concerning smaller companies in relation to the UK Corporate Governance Code?
What is the main issue highlighted concerning smaller companies in relation to the UK Corporate Governance Code?
How does Lowry perceive the relationship between ownership and management in most companies?
How does Lowry perceive the relationship between ownership and management in most companies?
What consequence arose from the informality of procedure among owner/managers in the Regal case?
What consequence arose from the informality of procedure among owner/managers in the Regal case?
What is one of the responsibilities of directors regarding board meetings?
What is one of the responsibilities of directors regarding board meetings?
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What is one argument made regarding the role of non-executive directors?
What is one argument made regarding the role of non-executive directors?
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What signifies a shift in judicial attitudes regarding director negligence?
What signifies a shift in judicial attitudes regarding director negligence?
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What does the Regal principle primarily seek to protect?
What does the Regal principle primarily seek to protect?
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Under what condition can a director trust an official to perform delegated duties?
Under what condition can a director trust an official to perform delegated duties?
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Which case illustrates the principle of a director not being liable for failing to attend meetings?
Which case illustrates the principle of a director not being liable for failing to attend meetings?
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What behavior is most likely to breach a director's fiduciary duty?
What behavior is most likely to breach a director's fiduciary duty?
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What guidance can directors take from recent changes in the standard of care expected from them?
What guidance can directors take from recent changes in the standard of care expected from them?
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What legal principle is demonstrated in Cook v Deeks?
What legal principle is demonstrated in Cook v Deeks?
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What does the concept of 'ignorance could no longer be a shield to negligence' imply for directors?
What does the concept of 'ignorance could no longer be a shield to negligence' imply for directors?
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In the Framlington case, why was the conflict of interest rule deemed inapplicable?
In the Framlington case, why was the conflict of interest rule deemed inapplicable?
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What was the main issue in the Boardman v Phipps case?
What was the main issue in the Boardman v Phipps case?
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In Island Export Finance v Umunna, what determined that Umunna did not misuse corporate opportunity?
In Island Export Finance v Umunna, what determined that Umunna did not misuse corporate opportunity?
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What was the outcome of the Canadian Aero Service Ltd v O’Malley case regarding corporate opportunities?
What was the outcome of the Canadian Aero Service Ltd v O’Malley case regarding corporate opportunities?
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In the Peso Silver Mines case, what determined that the directors did not exploit a corporate opportunity?
In the Peso Silver Mines case, what determined that the directors did not exploit a corporate opportunity?
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What was a significant issue highlighted in Regal Hastings v Gulliver?
What was a significant issue highlighted in Regal Hastings v Gulliver?
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What issue arises when a director exploits an opportunity after a bona fide rejection by the board?
What issue arises when a director exploits an opportunity after a bona fide rejection by the board?
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In relation to the Bray v Ford case, which of the following is true about the obligations of directors?
In relation to the Bray v Ford case, which of the following is true about the obligations of directors?
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What is the traditional interpretation of to whom directors owe their duties?
What is the traditional interpretation of to whom directors owe their duties?
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What statute replaced CA 1985 s309 regarding directors' duties?
What statute replaced CA 1985 s309 regarding directors' duties?
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Which case indicates that the interests of the company may include those of its creditors?
Which case indicates that the interests of the company may include those of its creditors?
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According to Vanessa Finch, when are directors likely to be held to account for incompetence?
According to Vanessa Finch, when are directors likely to be held to account for incompetence?
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What challenges arise when trying to impose one standard of care on all directors?
What challenges arise when trying to impose one standard of care on all directors?
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In which situation may the interests of creditors become paramount?
In which situation may the interests of creditors become paramount?
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What opinion is expressed about directors' duties of skill and care in recent years?
What opinion is expressed about directors' duties of skill and care in recent years?
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Which of the following best describes the directors’ duty as outlined by CA 2006 s172(1)?
Which of the following best describes the directors’ duty as outlined by CA 2006 s172(1)?
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What is required of directors when they ought to know the company will go into insolvent liquidation?
What is required of directors when they ought to know the company will go into insolvent liquidation?
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According to the leading case of Re City Equitable Fire & Insurance Co Ltd, what is Rule 1 concerning a director's performance?
According to the leading case of Re City Equitable Fire & Insurance Co Ltd, what is Rule 1 concerning a director's performance?
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What significant shift in the law regarding director's duties is mentioned in the content?
What significant shift in the law regarding director's duties is mentioned in the content?
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In the case of Dorchester Finance Co v Stebbings, what principle was established regarding directors' duties?
In the case of Dorchester Finance Co v Stebbings, what principle was established regarding directors' duties?
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What did the court reveal in the Australian case Daniels v Anderson regarding directors' familiarity with company operations?
What did the court reveal in the Australian case Daniels v Anderson regarding directors' familiarity with company operations?
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What does the case of Norman v Theodore Goddard highlight regarding the standard of care expected from directors?
What does the case of Norman v Theodore Goddard highlight regarding the standard of care expected from directors?
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According to the content, what aspect of the minimalist standard of competence is being reassessed by the courts?
According to the content, what aspect of the minimalist standard of competence is being reassessed by the courts?
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What is a potential consequence for directors failing in their duty to creditors during insolvency?
What is a potential consequence for directors failing in their duty to creditors during insolvency?
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What factor has contributed to the decline in the general meeting’s supervision of corporate policy?
What factor has contributed to the decline in the general meeting’s supervision of corporate policy?
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What is one of the duties of the general meeting concerning the company?
What is one of the duties of the general meeting concerning the company?
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What was the purpose of the Cadbury Committee established in 1991?
What was the purpose of the Cadbury Committee established in 1991?
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In the context of directors' duties, what is a key concern raised by the Dine report?
In the context of directors' duties, what is a key concern raised by the Dine report?
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According to recent discussions, what aspect of directors' obligations needs further scrutiny?
According to recent discussions, what aspect of directors' obligations needs further scrutiny?
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What legal concept primarily determines the division of powers between the board and the general meeting?
What legal concept primarily determines the division of powers between the board and the general meeting?
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What key consideration must the general meeting account for in their decision-making?
What key consideration must the general meeting account for in their decision-making?
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What was a significant outcome of financial scandals in the 1980s related to directors' duties?
What was a significant outcome of financial scandals in the 1980s related to directors' duties?
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Study Notes
Division of Company Powers
- Originally, company powers resided with the general meeting of members.
- Directors acted as agents of the company on behalf of the general meeting.
- General meeting's authority has decreased due to company growth and complexity.
- Larger companies see a clear separation between ownership and control.
- Articles of Association delineate powers between the board and general meeting.
- Duty of general meeting is to act for the benefit of the company.
- Company interests must be prioritized over interests of creditors (within company interests).
Directors' Duties
- Directors are viewed as agents with delegated powers to manage the company.
- 1980s financial scandals led to the Cadbury Committee's formation to strengthen corporate controls.
- Code of Best Practice was developed.
- "Governance of governance" criticizes the Code for further debate and issues like non-executive directors' roles.
- Legal review regarding director duties is needed to enhance corporate governance standards.
Duty of Care and Skill
- Directors aren't obligated to exhibit exceptional skill but must meet a reasonable standard.
- The standard expectation is initially low but increasing.
- Fifth EC Directive (Art 14) introduced liability for board members' actions that negatively impact the company.
- Objective standard of care is now required (IA 86/Art 178 I(NI)O 89) and is what someone in that particular position would be expected to do.
- Directors should be aware of company affairs.
- Directors should hold regular board meetings (but aren't obliged to attend all).
- Directors should attend meetings if able.
Conflict of Duty and Interest
- Misappropriating company property (e.g., Cook v Deeks)
- Conflict of interest arises when a director's personal interests conflict with those of the company.
- Cases like Bray v Ford, Regal Hastings v Gulliver, Boardman v Phipps, IDC v Cooley, Canadian Aero etc have explored this.
- Framlington Group case examined company director conflict of interest implications where a company selling another was conflicted with the possible sale profit.
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Description
Explore the division of company powers and the evolution of directors' duties in corporate governance. This quiz covers the historical context, the impact of financial scandals, and the regulatory frameworks that shape modern corporate practices. Test your understanding of the roles and responsibilities of directors and general meetings.