The Companies Act 2006 requires directors: to act in accordance with the constitution and to exercise powers only for the purposes for which they are conferred. This chapter focuses on s 171. Typically, all powers of management are vested in the board, but issues arise around the authority of individual directors too. The discussion covers the constitutional division of power within a company, the different types of authority and the statutory protection provided for third parties by CA 2006, s 40. A key constraint on directors’ power is the obligation to act only for a proper purpose in s 171(b) which has been the subject of important caselaw, including from the Supreme Court, which is discussed in detail.
