This requirement will pose no problems where a

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This requirement will pose no problems where a director is acting in good faith and in the interest of the company. The disclosure may be done formally at a meeting or by notice, or informally by somehow making the other directors aware of the interest, as was the case in Lee Panavision Ltd. v Lee Lighting Ltd (1992) BCLC 22. However, disclosure would not be necessary where the other directors are already aware of the interest, or where the matter involves a director’s service contract. Runciman v. Walter Runciman Plc . (1992) BCLC 1084 – The claimant, the executive chairman of the defendant company, was unfairly dismissed from office. He sued for damages for unfair dismissal. The company sought to reduce the amount of damages payable to him on the ground that his service contract and that of other executive directors had been extended without the claimant disclosing his interest in this to the board of directors. Because of this, the company argued that the contract was voidable. It was held that since it was blatantly obvious to everybody in the management of the company that the plaintiff had an interest in his own service contract, there was no need for a formal declaration of the interest to the board. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY COMPANY DIRECTORS 441 Similarly, if a director has an interest in an existing transaction, contract or arrangement involving his company, he must declare the nature and extent of this interest to the board of directors as soon as reasonably practicable – s. 182 CA 2006. Again the declaration may be at a meeting, by notice, or informally. If the director fails to disclose such an interest, he will be committing a crime punishable with a fine – s. 183. Where a company has only one director, the director must declare and record his interest in a meeting of the board even though he would be the only person in attendance – s. 231 CA 2006; Neptune (Vehicle Washing Equipment) Ltd. v. Fitzgerald (1995) 1 BCLC 352; [1996] Ch 274. 24.11.5 DUTY TO EXERCISE INDEPENDENT JUDGEMENT Under s.173 CA 2006, a director must exercise independent judgement in the best interest of the company. This means that he must not allow himself to be unduly influenced in his future decisions by third parties. A director must not fetter the future exercise of his discretion unless he is acting (a) in accordance with an agreement between him and the company, or (b) in accordance with the company’s constitution. It could in fact be said that any fettering of directors’ discretion for the company’s benefit would not contravene this rule as illustrated in Fulham Football Club and Others v Cabra Estates Plc (1994) 1 BCLC 363: Download free eBooks at bookboon.com Click on the ad to read more Visit us and find out why we are the best!
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