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Sections 171 to 188 of Companies Act 2006 - Coursework Example

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The author of the paper titled "Sections 171 to 188 of Companies Act 2006" examines this act, the major objective behind which is to make businesses more transparent in their dealings, especially after the scandals at Enron, WorldCom, Parmalat, and Snell…
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Sections 171 to 188 of Companies Act 2006
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Extract of sample "Sections 171 to 188 of Companies Act 2006"

Download file to see previous pages A Director of a company does not have to be a natural person but existing Company law had mandated that directors are expected to act in the best interests of the Company. While their decisions may be conditioned by their own judgment of what they consider to be best at the time the decision is made, however, all such decisions and judgments are expected to be made on the basis of what they believe is best for the Company. Therefore, the general duties of a Director have been set out as a general allowance in making decisions according to their own discretion, however, a director’s actions and decisions are expected to be in the best interests of the Company.

An examination of the provisions of the Companies Act of 2006 shows that much of the same goals and objectives have been retained in so far as general duties of a Director are concerned. For example, Section 172 deals with the Director’s duty to promote the success of his Company. It states that “a Director of a Company must act in the way he considers, in good faith, would be most likely to promote the success of his Company..”5 Therefore, this is a provision that is already existing in the law and cannot be said to represent a new aspect. The only difference that may be found is in the inclusion of the good faith requirement that is needed from Directors.

This was also stated by Latham CJ in Mills v Mills, that a director must act “bonafide for the benefit of the company.”7 Justice Plowman in the case of Parke v Daily News Ltd held that the primary duty of the directors of a corporation is to their shareholders, superseding their duty to their employees8. The duties of the director to the company are set out under the Companies Act, which imposes a duty upon the directors to look out for the interests of the company and its employees as well as its shareholders9. Therefore, what has been stated in the companies Act of 2006 is essentially the same thing that already existed in law. ...Download file to see next pagesRead More
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