‘Brings Commercial Litigation Issues Into Focus’

Specialist Provides Advice On Duties Of Directors


The recent announcement " by Stelios. Coming soon!" on a new website apparently made by Sir Stelios Haji-Ioannou, founder of EasyJet, seems to signal his intention to launch a new airline.

Stelios may be perfectly within his legal rights to do so, indeed many people have successfully launched businesses similar to other enterprises in which they retain, or have had, an interest.

This is what can make cases “tricky” says Jonathan Preston, an associate solicitor in the firm’s Commercial Dispute Resolution team.  Jonathan explains: “Each case is unique and there are number of things which need particular consideration, whether by the original company to protect its interests, by the competing business to minimise risks or by the individual concerned to look after themselves.

Jonathan highlights for example that: “Directors owe a number of fiduciary duties to a company and this has been the case as a result of judge-made law over many years. The Companies Act 2006 has also recently codified some general duties including responsibilities to promote the success of the company, to exercise independent judgment and to avoid conflicts of interest. However this is not exhaustive and other rules and principles continue to be relevant.

“Critically, some duties – including to avoid conflicting interests in relation to the exploitation of any property, information or opportunity that a director became aware of at a time when he was a director, the duty not to make unauthorised profits and the duty of confidentiality – do not cease to apply upon the director’s resignation.”

Jonathan outlined that a company may be able to apply for a court injunction against the activities of any director who breaches these duties.

He added: “Other remedies potentially available include the setting aside of transactions, an order that the wrong-doer must account for profits made as a result of the unlawful activity, restoring company property held by the director and an order to pay damages.

“In other instances there may be written agreements in place that could have a bearing. For example, if the person was not a director but an employee, then the person will not be under duties as onerous as those owed by directors.

“However, the terms of the employee’s contract of employment may contain provisions such as restrictive covenants and obligations of confidence that are relevant to such scenarios. Contractual terms between parties, if breached, may therefore also provide the company with legal avenues to peruse in order to protect its interests.”