LLB Company Law England and Wales Essay Example | Topics and Well Written Essays - 2500 words

LLB Company Law England and Wales - Essay Example According to the discussion the company’s articles may require such authorisation from the shareholders and in such cases, even if the board authorises such transaction, it is not valid unless members approve the same. In case of public companies, only if the constitution specifically permits this, then only the board will have authority to authorise such transactions in which a director is interested. It is to be noted that s 175 has to be interpreted in conjunction with the s 182 CA 2006. It is the latter section that deals with the scenario where a director has an interest in a present business arrangement or transaction. For instance, if A Ltd wants to enter into business dealing with B Ltd and X is a director in both the companies; This is really a conflict of interest scenario as X is the director in both the companies. If X has made an disclosure of his interest to the board of the both companies and has obtained approval from the member of the boards, then, it is said that he has adhered with the section 175. From this paper it is clear that shareholders are authorised to take derivative action against the directors of the company for the loss sustained to the company due to the conflict of interest by a director of the company. Part II of CA 2006-under s 260 - now provides an opportunity for shareholders to initiate derivative action against the company for any proposed act or any actual omission involving default, negligence, breach of trust or breach of duty. Under this, as exclusion to the rule laid down in Foss v Harbottle, a statutory derivative claim can be initiated by a shareholder against the company directors, and this section does not complement the rule laid down in Foss v Harbottle but simply offers a legal procedure for a derivative action. In this case, Brian can make a derivative action against the directors to reimburse the loss sustained by the company. Further , board has kept silent even after finding the lapse and Brain has every right to sue the directors of the com pany, including Marcus for their act of negligence . Issue II â€Å"Duty to promote the Success of the Company† Duties owed by a director of a company to the company are enumerated in S 171 to 177 of CA 2006.