Business Law Essay Example | Topics and Well Written Essays - 2250 words

Business Law - Essay Example This is selected because it contains very relevant explanations and outlines of how directors and shareholders are expected to relate towards the collective success of their companies. Several UK case laws are also going to be analysed in such a way that by the end of the discussions, Mary and Joseph would clearly identify areas of legal liability in the conduct of their directors and areas where no legal liabilities exist. Directors’ Duty Duty owed to the company and not individual shareholders First, it is important for Mary and Joseph to realise that prior to CA 2006, the directors owe their duty to the company as a body and not to individual shareholders of the company. However, it has been explained earlier that the company is only an artificial person, who must be represented by natural people. Mary and Joseph could therefore direct their actions in such ways that they are either seen as individual shareholders fighting for their interest in the company or as members of the company as a body1. ... Similarly, in Percival v Wright (1902), it was held that the director of the directors in some instances owe fiduciary duties to individual shareholders of the company. By further implication, how a petitioner positions him or herself in cases against the adjudication of the duties of directos is very important in determining what the outcome of the petition would be3. Mary and Joseph will therefore be advised to position their selves as constitute members of the company rather than as interested parties in the acquisition because of the directors’ duty is owed to the company and not to individual shareholders4. Power to issue shares Further advice given to Mary and Joseph would bother on the power that the directors of the company have to issue shares. It would be noted that s 171 CA 2006, which touches on the duty of directors to act within powers clearly outlines the powers given to the directors to exercise powers for the purposes for which they are conferred5. As part of the powers, given by most companies to their directors also, there is the power for the issuance of shares where directors have the right to issue shares that they deem as acts profitable ventures for the company6. In effect, the argument of Mary and Joseph cannot be against the mere issuance of shares in the acquisition process of the subsidiary firm. The acquisition of the subsidiary company through the issuance of shares could easily be justified by the directors through their power to issue shares if the purpose for the formation of the subsidiary company had finished serving its roles7. In Hogg v Cramphorn Ltd (1967), it was held that the directors of the company could not be charged for