The Companies Act 2006, s 172(1) requires directors to act to promote the success of the company. This chapter separates that duty into its component elements: the duty to act in good faith; promoting the success of the company for the benefit of the members as a whole; and having regard to stakeholders. The policy background to the introduction of these obligations is considered, looking at the extent to which stakeholder interests are an important facet of this duty. The chapter also addresses in detail the modified duty to consider creditors' interests in s 172(3) and explores at length the landmark judgment in BTI 2014 LLC v Sequana SA on this issue.
Chapter
10. Duty to promote the success of the company
Chapter
10. Duty to promote the success of the company
The Companies Act 2006 (CA 2006) s. 172(1) requires directors to act to promote the success of the company. This chapter separates that duty into its component elements: the duty to act in good faith, promoting the success of the company for the benefit of the members as a whole, having regard to stakeholders (including employees), and considering creditors’ interests. The position of a nominee director in this scheme is considered. The pluralist debate which preceded the enactment of s 172 is addressed as well as the recent addition of further reporting obligations in order to strengthen the provision. The new s 172 statement is considered. The chapter explores in detail the evolving jurisprudence around s 172(3) and the need to have regard to creditors’ interest in certain circumstances.
