Companies Act 2006: Directors' Duties and Conflicts of Interest Report

This report examines the legal aspects of business, specifically focusing on the duties of directors and potential conflicts of interest under the Companies Act 2006. It explores the fiduciary responsibilities of directors, highlighting their role as agents of the company and the importance of maintaining confidentiality. The report delves into specific sections of the Act, including sections 171 and 175, which address loyalty, adherence to policies, and the avoidance of conflicts. It outlines scenarios where conflicts may arise, such as multiple directorships, shareholder involvement, and the personal use of company resources, providing examples and suggesting methods to mitigate these issues, such as seeking shareholder input and implementing pre-authorization procedures. The report also references the case of CMS Dolphin v Simonet, illustrating breaches of directors' duties. In conclusion, the report emphasizes the vital role directors play in upholding business integrity and protecting company interests. The report includes references to books, journals, and online resources that support the analysis.

LEGAL ASPECTS OF
BUSINESS

Table of Contents
• INTRODUCTION
• DUTIES OF DIRECTORS TO AVIOD CONFLICT UNDER SECTION 175 OF THE
COMPANIES ACT, 2006
• CONCLUSION
• REFERENCES

INTRODUCTION
In respect of examining the legal aspects of business it is covered by two person such as
shareholders and directors of the company. In context of shareholder they carry the
important rights in company in respect of taking decision.

DUTIES OF DIRECTORS TO AVIOD CONFLICT UNDER SECTION 175 OF THE COMPANIES ACT, 2006
Directors as agent
Under the companies act, 2006, directors carry the fiduciary relationship with the company
as they work as a agent. Directors are such person which are in charge of the work but not
carry the ownership rights.

To be contin…..
Duties of directors under section 171
• Loyalty
• Following policy and norms
• Attend the meeting

To be contin…..
Under section 175 (1) of companies act, 2006
• Actual and potential conflict

To be contin…..
Under section 175 (2) of companies act, 2006
• Company property, information or clients details to earn profits for their personal saving.

To be contin…..
Under section 175 (4) of companies act, 2006
• Personally responsible in respect of committing any breach

To be contin…..
E.g. Conflict of directors under section 175
• multiple directors
• shareholder of the company
• personal use.

To be contin…..
Avoid situation in respect of facing conflict
• Taking suggestion from shareholders
• pre authorization procedure

To be contin…..
CMS Dolphin v Simonet [2001] Ch D
• Mr. Simonet is the managing director
• director of the CMS Dolphin Ltd
• committing breach as being the post of the directors
of the company.

CONCLUSION
From the above study the report concludes that directors play the vital role in business, as
they work as agent and also carry the rights in respect of maintain the confidentiality at
work place.