Directors’ Duties and Shareholder Litigation in the Wake of the Financial Crisis

Directors’ Duties and Shareholder Litigation in the Wake of the Financial Crisis

Corporations, Globalisation and the Law series

Joan Loughrey

The financial crisis revealed failings at board level at many financial institutions. But despite calls for bank boards to be held to account, there has been a remarkable paucity of litigation against bank directors for breach of their duties to their institutions. This book assesses whether the law relating to directors’ duties and shareholder litigation has contributed to this, taking into account the changes to both that were introduced by the Companies Act 2006.

Chapter 8: Directors’ duties and shareholder litigation: the practical perspective

Joan Loughrey

Subjects: business and management, corporate social responsibility

Extract

This chapter assesses the practical implications of s.172 Companies Act 2006 and the role of shareholder litigation. This perspective is critical to an informed understanding of the law, and how it operates in practice. The chapter presents the views both of practitioners who are involved in the practical application of the law, and of academics who have carried out empirical research into the themes addressed in this book. The material herein is an edited record of a discussion between academics and practitioners which took place at the University of Leeds in September 2010. It addresses the following issues: the significance of s.172 and s.174 Companies Act 2006; the jurisdictional difference between derivative litigation and litigation under s.994 Companies Act 2006; and shareholder litigation and enforcement of directors’ duties more generally.

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