Director's Duty to Avoid Conflict of Interest

By



ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

ABSTRACT

The director's duty to avoid conflict of interest is one of the most important tasks under the Companies Act 2006 of UK. It has been seen in this topic that the directors have got huge responsibilities and duties to perform under the UK Company Law. They cannot afford to refrain themselves from these tasks because it would create a negative environment in the organisation. If the directors will not take care of the responsibilities and tasks, then there is a chance that they will develop a bias attitude towards their employees and stakeholders. The directors will get selfish and would only look to have personal gains. This is the reason why the role of directors have been completely analysed in this topic and the importance it carries for the whole organisation. It has been seen that whether Companies Act 2006 has been able to make directors perform their duties and responsibilities in an effective way. Before the implementation of Companies Act 2006, the application of the role of directors was a bit difficult and previous case laws were not even dealt in an appropriate way. The enforcement of Companies Act 2006 has made a huge difference in this regard. Therefore, the importance of the role of directors in avoiding conflict of interest has been completely discussed and the way Companies Act 2006 has made it easier for the companies to implement Company Law in their overall working environment.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

INTRODUCTION1

Overview of the study1

Problem Statement2

Research Aims and Objectives2

Rationale/ Nature of the study2

CHAPTER 1: BACKGROUND4

The role of directors in a company4

The emergence of the duty5

The rationale behind the duty, (duty of loyalty)5

What is the interest at stake?6

Considering if the duty did not exist at all what may happen7

Awareness of the need for the duty8

Conclusion on where the current law is at8

CHAPTER 2: DUTY TO AVOID SUCCESS IN ACTION10

Duty to avoid success in action10

Conflict of duty under 200613

Exceptions to the duty14

The final requirement for the directors within the UK Companies Act 200618

CHAPTER 3: PROBLEMS WITH THE DUTY21

Case Law Commentary on verdicts21

Section 172 Duty to promote the success of the company22

Case Law23

Differing opinions between judges25

Support given to the judge's opinion26

Following of the same principle in other cases26

Identification of the Problem28

Bhullar v Bhullar Case29

Bribery Act 201030

Strictness of the Current Law31

CHAPTER 4: CURRENT LAW ON CONFLICT OF INTEREST33

Suggestions from Law articles33

An overall approach for the case37

Appropriateness of the suggestion40

The working on the suggestion40

The Costs42

CHAPTER 5: CONCLUSION45

Review of the study45

Limitations45

Scope of the Research46

Recommendations46

REFERENCES48

INTRODUCTION

Overview of the study

The issue of director's ...