The Federation Press

Directors’ Duties

Principles and Application

Overview

Directors’ Duties: Principles and Application outlines key fiduciary and statutory duties of Australian company directors, with detailed reference to the position in the United Kingdom. It is addressed to academics, students and practitioners and resolves complex issues, as well as giving practical guidance on the characteristics and application of general law and statutory duties. In so doing it provides critical analysis of the scope and content of fiduciary duties in general and resolves a patent clash between prevalent modern equity theory and Australian corporate law jurisprudence as concerns directors’ duties.

Particular focus is given to the duties that have traditionally been characterised as fiduciary. These are the duties to avoid conflicts and profits, to act in good faith in the interests of the company and for proper purposes, to retain discretions and to disclose information. The duty of care is also examined and the book demonstrates why this duty is different to other key duties. This issue has been the subject of contention and is significant for remedial purposes. The book demonstrates the central and foundational nature of the duty to act in good faith in the interests of the company.

The book also outlines the statutory duties in the Corporations Act 2001 (Cth) which correspond to the general law duties, as well as the consequences of breach of the statutory and fiduciary duties of directors and the significance of fiduciary classification. Extensive examination of the position in the United Kingdom is provided, which is of direct relevance to the analysis of the Australian position and also to the interpretation of English law.

The book therefore provides certainty for practitioners, academics and students in the organisation and application of key directors’ duties, presenting a clear structure for such organisation and application. Its outline and resolution of the contours of the fiduciary concept are also of direct relevance to scholars and practitioners in the areas of Equity and Trusts.

Reviews

Dr Langford has written an incisive and convincing account of the fiduciary obligations of company directors. This is a complex area of corporations law, as the recent Bell Group litigation has demonstrated, but Dr Langford provides a masterly account of its governing principles. - Professor Emeritus Michael Bryan, Melbourne Law School, The University of Melbourne

The subject of directors’ fiduciary duties has taken on its own mantle: one that nowadays looms large over both company law and insolvency law. While perhaps 20 or so years ago all seemed settled by the case law, the modern courts in both Australia and the UK have been confronting a burgeoning caseload. The result is that contemporary judges have taken the opportunity to revisit traditional equitable principles and have overlaid them with nuances in ways not anticipated by their chancery precursors. Indeed, this development recently moved Moses LJ in the Court of Appeal of England and Wales to remark that it made ‘one almost nostalgic for the days when there were inflexible rules, inexorably enforced by judges …’ Dr Langford’s book is therefore very timely. It gives the reader a thorough, stimulating and scholarly treatment of what by any measure has become a very complex body of law. The work focuses primarily on the common law fiduciary duties of directors, but also provides excellent treatment of their statutory duties. Dr Langford’s excellent analysis will, without doubt, inform the current debate on this important topic. The book deserves to occupy a central place on the bookshelves of judges, practitioners, policy-makers and academic commentators. - Professor Emeritus John Lowry, University College London

Dr Langford has written an excellent analysis of directors’ duties that will be invaluable to legal practitioners, judges, regulators, academics and others with an interest in the important topic of directors’ duties. The book is the culmination of many years of scholarly work by Dr Langford and reflects her deep understanding of developments in fiduciary duties. The book examines in detail the key duties to act in the best interests of the company, to act for a proper purpose, to avoid conflicts, to retain discretions, to disclose and to exercise reasonable care. The book also deals with remedies for breach of duty and draws helpful comparisons with UK law. A notable feature of the book is the detailed analysis the author provides of key court judgments. The book advances our understanding of directors’ duties and, in particular, our understanding of the relationship between the various duties considered in the book and the relationship between corporate law jurisprudence and fiduciary theory. Dr Langford is to be commended for her authorship of this impressive book. - Professor Ian Ramsay, Harold Ford Professor of Commercial Law and Director of the Centre for Corporate Law and Securities Regulation, Melbourne Law School, The University of Melbourne

Table of Contents

Foreword by Robert Baxt AO
Preface
About the Author
Acknowledgments
Permissions Acknowledgments
Table of Cases
Table of Statutes
Table of Abbreviations

Introduction
Directors’ Fiduciary Duties
Shift in Australian Fiduciary Theory
The Bona Fide Rule
The Fiduciary Nature of the Bona Fide Rule
The Conflicts and Profits Rules
The Proper Purposes Rule
The Duties to Retain Discretions and to Disclose
The Duty of Care
Remedies
Comparative Evaluation
Conclusion

Index

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