Directors' duties
Encyclopedia
Directors' duties are a series of statutory, common law and equitable obligations owed primarily by members of the board of directors
to the corporation
that employs them. It is a central part of corporate law
and corporate governance
. Directors' duties are analogous to duties owed by trustees to beneficiaries, and by agents to principals.
Among different jurisdictions, a number of similarities between the framework for directors' duties exist.
:
Directors are also strictly charged to exercise their powers only for a proper purpose. For instance, were a director to issue a large number of new shares, not for the purposes of raising capital but to defeat a potential takeover bid, that would be an improper purpose.
However, in many jurisdictions the members of the company are permitted to ratify transactions that would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
Directors must exercise their powers for a proper purpose. While in many instances an improper purpose is readily evident, such as a director looking to feather his or her own nest or divert an investment opportunity to a relative, such breaches usually involve a breach of the director's duty to act in good faith. Greater difficulties arise where the director, while acting in good faith, is serving a purpose that is not regarded by the law as proper.
The seminal authority in relation to what amounts to a proper purpose is the Privy Council
decision of Howard Smith Ltd v. Ampol Ltd. The case concerned the power of the directors to issue new shares
. It was alleged that the directors had issued a large number of new shares purely to deprive a particular shareholder of his voting majority. The court rejected an argument that the power to issue shares could only be properly exercised to raise new capital as too narrow, and held that it would be a proper exercise of the director's powers to issue shares to a larger company to ensure the financial stability of the company, or as part of an agreement to exploit mineral rights owned by the company. If so, an incidental result (even desirable) that a shareholder lost his majority, or a takeover bid was defeated would not itself make the share issue improper. But if the sole purpose was to destroy a voting majority, or block a takeover bid, that would be an improper purpose.
Not all jurisdictions recognised the "proper purpose" duty as separate from the "good faith" duty however.
This represents a considerable departure from the traditional notion that directors' duties are owed only to the company. Previously in the United Kingdom, under the Companies Act 1985
, protections for non-member stakeholders were considerably more limited (see e.g., s.309, which permitted directors to take into account the interests of employees but that could be enforced only by the shareholders, and not by the employees themselves. The changes have therefore been the subject of some criticism. Directors must act honestly and in bona fide. The test is a subjective one—the directors must act in "good faith
in what they consider—not what the court may consider—is in the interests of the company..." However, the directors may still be held to have failed in this duty where they fail to direct their minds to the question of whether in fact a transaction was in the best interests of the company.
Difficult questions arise when treating the company too abstractly. For example, it may benefit a corporate group as a whole for a company to guarantee the debts of a "sister" company, even if there is no "benefit" to the company giving the guarantee. Similarly, conceptually at least, there is no benefit to a company in returning profits to shareholders by way of dividend. However, the more pragmatic approach illustrated in the Australian case of Mills v. Mills (1938) 60 CLR 150 normally prevails:
Directors cannot, without the consent of the company, fetter their discretion
in relation to the exercise of their powers, and cannot bind themselves to vote in a particular way at future board meetings. This is so even if there is no improper motive or purpose, and no personal advantage to the director.
This does not mean, however, that the board cannot agree to the company entering into a contract that binds the company to a certain course, even if certain actions in that course will require further board approval. The company remains bound, but the directors retain the discretion to vote against taking the future actions (although that may involve a breach by the company of the contract
that the board previously approved).
However, this decision was based firmly in the older notions (see above) that prevailed at the time as to the mode of corporate decision making, and effective control residing in the shareholders; if they elected and put up with an incompetent decision maker, they should not have recourse to complain.
However, a more modern approach has since developed, and in Dorchester Finance Co Ltd v Stebbing [1989] BCLC 498 the court held that the rule in Equitable Fire related only to skill, and not to diligence. With respect to diligence, what was required was:
This was a dual subjective and objective test, and one deliberately pitched at a higher level.
More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively; in the United Kingdom the statutory provisions relating to directors' duties in the new Companies Act 2006
have been codified on this basis.
or conflict with their duty to act in the best interests of the company. This rule is so strictly enforced that, even where the conflict of interest or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v. Blaikie (1854) 1 Macq HL 461 Lord Cranworth
stated in his judgment that,
As fiduciaries, the directors may not put themselves in a position where their interests and duties conflict with the duties that they owe to the company. The law takes the view that good faith must not only be done, but must be manifestly seen to be done, and zealously patrols the conduct of directors in this regard; and will not allow directors to escape liability by asserting that his decision was in fact well founded. Traditionally, the law has divided conflicts of duty and interest into three sub-categories.
Transactions with the company
By definition, where a director enters into a transaction with a company, there is a conflict between the director's interest (to do well for himself out of the transaction) and his duty to the company (to ensure that the company gets as much as it can out of the transaction). This rule is so strictly enforced that, even where the conflict of interest
or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v. Blaikie Lord Cranworth
stated in his judgment that:
However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
In many countries there is also a statutory duty to declare interests in relation to any transactions, and the director can be fined for failing to make disclosure.
Use of corporate property, opportunity, or information
Directors must not, without the informed consent of the company, use for their own profit the company's assets, opportunities, or information. This prohibition is much less flexible than the prohibition against the transactions with the company, and attempts to circumvent it using provisions in the articles have met with limited success.
In Regal (Hastings) Ltd v Gulliver
[1942] All ER 378 the House of Lords, in upholding what was regarded as a wholly unmeritorious claim by the shareholders, held that:
And accordingly, the directors were required to disgorge the profits that they made, and the shareholders received their windfall.
The decision has been followed in several subsequent cases, and is now regarded as settled law.
Competing with the company
Directors cannot, clearly, compete directly with the company without a conflict of interests arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other.
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
to the corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
that employs them. It is a central part of corporate law
Corporate law
Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law...
and corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
. Directors' duties are analogous to duties owed by trustees to beneficiaries, and by agents to principals.
Among different jurisdictions, a number of similarities between the framework for directors' duties exist.
- directors owe duties to the corporation, and not to individual shareholders, employees or creditors outside exceptional circumstances
- directors' core duty is to remain loyal to the company, and avoid conflicts of interest
- directors are expected to display a high standard of care, skill or diligence
- directors are expected to act in good faithGood faithIn philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
to promote the success of the corporation
General Law
Directors have Fiduciary Duties under general law in Australia. They are:- Duty to act in good faith and in the interest of the company
- Duty to use power for a proper purpose
- Duty to avoid conflicts of interest
- Duty to retain discretion
- Duty to act with reasionable care and diligence
Statutory Duties
Directors also have duties under Corporations Act 2001Corporations Act 2001
The Corporations Act 2001 , sometimes referred to just as the Corporations Act , is an act of the Commonwealth of Australia that sets out the laws dealing with business entities in Australia at federal and interstate level...
:
- Section 181: Mirrors the general law duty to act in good faith, in the best intersts of the company and for proper purpose.
- Section 182: Duty not to misuse position to gain advantage
- Section 183: Duty not to misuse information to gain advantage
- Section 184: Directors breach section 181, 182 and 183 for gain and where the conduct is reckless or intentionally dishonest. Criminal penalty will be applied to against director who breach 184.
Business judgment
- Smith v. Van GorkomSmith v. Van GorkomSmith v. Van Gorkom 488 A.2d 858 is an important Delaware Supreme Court decision, primarily because of its discussion of a director's duty of care. It is often called the "Trans Union case".-Facts:...
, 488 A.2d 858 (Del. 1985) and §102)b)(7) DGCL - Dodge v. Ford Motor Co., 204 Mich. 459, 170 N.W. 668 (1919)
- Aronson v. Lewis
- In re Caremark International Inc. Derivative LitigationIn re Caremark International Inc. Derivative LitigationIn re Caremark International Inc. Derivative Litigation, 698 A.2d 959 , is a Delaware Court of Chancery decision setting out an expanded discussion of a director's duty of care in the oversight context. The opinion was written by Chancellor Allen.-Facts:The shareholders of Caremark International, Inc...
698 A 2d 959 (Del. Ch. 1996) - In re Walt Disney Co. Derivative LitigationIn re Walt Disney Co. Derivative LitigationIn re Walt Disney Co. Derivative Litigation 907 A.2d 693 is a US corporate law case concerning the standard of review for business judgments under the Delaware General Corporation Law.-Facts:...
907 A.2d 693 (Del. Ch. 2005)
Acting within powers
- s.171 CA 2006
Directors are also strictly charged to exercise their powers only for a proper purpose. For instance, were a director to issue a large number of new shares, not for the purposes of raising capital but to defeat a potential takeover bid, that would be an improper purpose.
However, in many jurisdictions the members of the company are permitted to ratify transactions that would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
Directors must exercise their powers for a proper purpose. While in many instances an improper purpose is readily evident, such as a director looking to feather his or her own nest or divert an investment opportunity to a relative, such breaches usually involve a breach of the director's duty to act in good faith. Greater difficulties arise where the director, while acting in good faith, is serving a purpose that is not regarded by the law as proper.
The seminal authority in relation to what amounts to a proper purpose is the Privy Council
Judicial Committee of the Privy Council
The Judicial Committee of the Privy Council is one of the highest courts in the United Kingdom. Established by the Judicial Committee Act 1833 to hear appeals formerly heard by the King in Council The Judicial Committee of the Privy Council (JCPC) is one of the highest courts in the United...
decision of Howard Smith Ltd v. Ampol Ltd. The case concerned the power of the directors to issue new shares
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
. It was alleged that the directors had issued a large number of new shares purely to deprive a particular shareholder of his voting majority. The court rejected an argument that the power to issue shares could only be properly exercised to raise new capital as too narrow, and held that it would be a proper exercise of the director's powers to issue shares to a larger company to ensure the financial stability of the company, or as part of an agreement to exploit mineral rights owned by the company. If so, an incidental result (even desirable) that a shareholder lost his majority, or a takeover bid was defeated would not itself make the share issue improper. But if the sole purpose was to destroy a voting majority, or block a takeover bid, that would be an improper purpose.
Not all jurisdictions recognised the "proper purpose" duty as separate from the "good faith" duty however.
Promoting company success
- s.172 CA 2006, "to promote the success of the company for the benefit of its members as a whole". It sets out six factors to which a director must have regards in fulfilling the duty to promote success. These are:
- the likely consequences of any decision in the long term
- the interests of the company’s employees
- the need to foster the company’s business relationships with suppliers, customers and others
- the impact of the company’s operations on the community and the environment
- the desirability of the company maintaining a reputation for high standards of business conduct, and
- the need to act fairly as between members of a company
This represents a considerable departure from the traditional notion that directors' duties are owed only to the company. Previously in the United Kingdom, under the Companies Act 1985
Companies Act 1985
The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...
, protections for non-member stakeholders were considerably more limited (see e.g., s.309, which permitted directors to take into account the interests of employees but that could be enforced only by the shareholders, and not by the employees themselves. The changes have therefore been the subject of some criticism. Directors must act honestly and in bona fide. The test is a subjective one—the directors must act in "good faith
Good faith
In philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
in what they consider—not what the court may consider—is in the interests of the company..." However, the directors may still be held to have failed in this duty where they fail to direct their minds to the question of whether in fact a transaction was in the best interests of the company.
Difficult questions arise when treating the company too abstractly. For example, it may benefit a corporate group as a whole for a company to guarantee the debts of a "sister" company, even if there is no "benefit" to the company giving the guarantee. Similarly, conceptually at least, there is no benefit to a company in returning profits to shareholders by way of dividend. However, the more pragmatic approach illustrated in the Australian case of Mills v. Mills (1938) 60 CLR 150 normally prevails:
"[directors are] not required by the law to live in an unreal region of detached altruism and to act in the vague mood of ideal abstraction from obvious facts which [sic] must be present to the mind of any honest and intelligent man when he exercises his powers as a director."
- Hutton v. West Cork Railway CoHutton v. West Cork Railway CoHutton v West Cork Railway Co 23 Ch D 654 is a UK company law case, which concerns the limits of a director's discretion to spend company funds for the benefit of non-shareholders...
(1883) 23 Ch D 654, per Bowen LJ,
"money which [sic] is not theirs but the company’s, if they are spending it for the purposes which are reasonably incidental to the carrying on of the business of the company. That is the general doctrine. Bona fides cannot be the sole test, otherwise you might have a lunatic conducting the affairs of the company, and paying away its money with both hands in a manner perfectly bona fide yet perfectly irrational… It is for the directors to judge, provided it is a matter which is reasonably incidental to the carrying on of the business of the company… The law does not say that there are to be no cakes and ale, but there are to be no cakes and ale except such as are required for the benefit of the company."
- Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606
Independent judgment
- s.173 CA 2006
Directors cannot, without the consent of the company, fetter their discretion
Discretion
Discretion is a noun in the English language with several meanings revolving around the judgment of the person exercising the characteristic.-Meanings:*"The Art of suiting action to particular circumstances"...
in relation to the exercise of their powers, and cannot bind themselves to vote in a particular way at future board meetings. This is so even if there is no improper motive or purpose, and no personal advantage to the director.
This does not mean, however, that the board cannot agree to the company entering into a contract that binds the company to a certain course, even if certain actions in that course will require further board approval. The company remains bound, but the directors retain the discretion to vote against taking the future actions (although that may involve a breach by the company of the contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
that the board previously approved).
Care and skill
Traditionally, the level of care and skill a director must demonstrate has been framed largely with reference to the non-executive director. In Re City Equitable Fire Insurance Co [1925] Ch 407, it was expressed in purely subjective terms, where the court held that:- "a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience." (emphasis added)
However, this decision was based firmly in the older notions (see above) that prevailed at the time as to the mode of corporate decision making, and effective control residing in the shareholders; if they elected and put up with an incompetent decision maker, they should not have recourse to complain.
However, a more modern approach has since developed, and in Dorchester Finance Co Ltd v Stebbing [1989] BCLC 498 the court held that the rule in Equitable Fire related only to skill, and not to diligence. With respect to diligence, what was required was:
- "such care as an ordinary man might be expected to take on his own behalf."
This was a dual subjective and objective test, and one deliberately pitched at a higher level.
More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively; in the United Kingdom the statutory provisions relating to directors' duties in the new Companies Act 2006
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
have been codified on this basis.
- s.174, CA 2006
- Re Barings plc (No.5)Re Barings plc (No.5)Re Barings plc [1999] 1 BCLC 433 is a leading UK company law case, concerning directors' duties of care and skill. Some reporters and commentators call this case "No 5" while others refer to it as "No 6" in the saga of litigation concerning Barings Bank.-Facts:Nick Leeson was a dishonest futures...
[1999] 1 BCLC 433 - Re D’Jan of London Ltd [1994] 1 BCLC 561
Loyalty and conflicts of interest
Directors also owe strict duties not to permit any conflict of interestConflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
or conflict with their duty to act in the best interests of the company. This rule is so strictly enforced that, even where the conflict of interest or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v. Blaikie (1854) 1 Macq HL 461 Lord Cranworth
Robert Rolfe, 1st Baron Cranworth
Robert Monsey Rolfe, 1st Baron Cranworth PC was a British lawyer and Liberal politician. He twice served as Lord High Chancellor of Great Britain.-Background and education:...
stated in his judgment that,
"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..."
- s.175 CA 2006
- Keech v. SandfordKeech v. SandfordKeech v Sandford [1726] is a foundational case on the fiduciary duty of loyalty. It concerns the law of trusts and has affected much of the thinking on directors' duties in company law. It holds that a trustee owes a strict duty of loyalty so that there can never be a possibility of any conflict...
(1726) Sel Cas. Ch.61
- Aberdeen Railway v. Blaikie (1854) 1 Macq HL 461, per Lord Cranworth,
"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..."
- Regal (Hastings) Ltd v Gulliver [1942] All ER 378
- Cook v DeeksCook v DeeksCook v Deeks [1916] 1 AC 554 is a UK company law case, concerning the illegitimate diversion of a corporate opportunity.In UK company law the case would now be seen as falling within the Companies Act 2006 section 175, with a failure to have ratification of breach by independent shareholders under...
[1916] 1 AC 554 - Industrial Development Consultants Ltd v Cooley [1972]
- Dorchester Finance Co Ltd v Stebbing [1989] BCLC 498
- In Plus Group Ltd v Pyke
- Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200
- O'Donnell v ShanahanO'Donnell v ShanahanO'Donnell v Shanahan [2009] is a UK company law case concerning the strict prohibition on any possibility of a conflict of interest between a director's duty to promote her company's success and her own gain.-Facts:...
[2009] EWCA Civ 751
As fiduciaries, the directors may not put themselves in a position where their interests and duties conflict with the duties that they owe to the company. The law takes the view that good faith must not only be done, but must be manifestly seen to be done, and zealously patrols the conduct of directors in this regard; and will not allow directors to escape liability by asserting that his decision was in fact well founded. Traditionally, the law has divided conflicts of duty and interest into three sub-categories.
Transactions with the company
By definition, where a director enters into a transaction with a company, there is a conflict between the director's interest (to do well for himself out of the transaction) and his duty to the company (to ensure that the company gets as much as it can out of the transaction). This rule is so strictly enforced that, even where the conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v. Blaikie Lord Cranworth
Robert Rolfe, 1st Baron Cranworth
Robert Monsey Rolfe, 1st Baron Cranworth PC was a British lawyer and Liberal politician. He twice served as Lord High Chancellor of Great Britain.-Background and education:...
stated in his judgment that:
"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..."
However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
In many countries there is also a statutory duty to declare interests in relation to any transactions, and the director can be fined for failing to make disclosure.
Use of corporate property, opportunity, or information
Directors must not, without the informed consent of the company, use for their own profit the company's assets, opportunities, or information. This prohibition is much less flexible than the prohibition against the transactions with the company, and attempts to circumvent it using provisions in the articles have met with limited success.
In Regal (Hastings) Ltd v Gulliver
Regal (Hastings) v Gulliver
Regal Ltd v Gulliver [1942] , is a leading case in UK company law regarding the rule against directors and officers from taking corporate opportunities in violation of their duty of loyalty. The Court held that a director is in breach of his duties if he takes advantage of an opportunity that the...
[1942] All ER 378 the House of Lords, in upholding what was regarded as a wholly unmeritorious claim by the shareholders, held that:
- "(i) that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in the utilisation of their opportunities and special knowledge as directors; and (ii) that what they did resulted in profit to themselves."
And accordingly, the directors were required to disgorge the profits that they made, and the shareholders received their windfall.
The decision has been followed in several subsequent cases, and is now regarded as settled law.
Competing with the company
Directors cannot, clearly, compete directly with the company without a conflict of interests arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other.
- Hogg v. Cramphorn Ltd.Hogg v. Cramphorn Ltd.Hogg v Cramphorn Ltd [1967] Ch 254 is a famous UK company law case on the director liability. The Court held that corporate directors who dilute the value of the stock in order to prevent a hostile takeover are breaching their fiduciary duty to the company.-Facts:Mr Baxter approached the board of...
[1967] Ch 254
Remedies for breach of duty
As in most jurisdictions, the law provides for a variety of remedies in the event of a breach by the directors of their duties:- injunctionInjunctionAn injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing certain acts. A party that fails to comply with an injunction faces criminal or civil penalties and may have to pay damages or accept sanctions...
or declarationDeclaration (law)In law, a declaration ordinarily refers to a judgment of the court or an award of an arbitration tribunal is a binding adjudication of the rights or other legal relations of the parties which does not provide for or order enforcement. Where the declaration is made by a court, it is usually... - damagesDamagesIn law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
or compensation - restoration of the company's property
- rescissionRescissionIn contract law, rescission has been defined as the unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract .-In court:Rescission is an...
of the relevant contractContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific... - account of profitsAccount of profitsAn account of profits is a type of equitable remedy most commonly used in cases of breach of fiduciary duty...
- summary dismissal
See also
- UK company law
- Aktiengesetz
- Delaware General Corporation Law
- Say on paySay on paySay on pay is a term used for a rule in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives.Often described in corporate governance or management theory as an agency problem, a corporation's directors are likely to overpay themselves because,...
- Fiduciary
- Non-executive directorNon-executive directorA non-executive director or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way...
- Executive directorExecutive directorExecutive director is a term sometimes applied to the chief executive officer or managing director of an organization, company, or corporation. It is widely used in North American non-profit organizations, though in recent decades many U.S. nonprofits have adopted the title "President/CEO"...