Director Dispute Solicitors

Yes, shareholders have the legal authority to dismiss a director of a company. This power is typically exercised during a general meeting, such as an Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM). Shareholders can vote to remove a director by passing a resolution, usually requiring a simple majority or a specified higher threshold as outlined in the company’s articles of association.

To initiate the removal process, shareholders need to follow the procedures prescribed by the Companies Act 2006 and the company’s articles of association. Proper notice of the proposed resolution must be given to all shareholders, and the director in question should be given an opportunity to respond.

It’s important to note that while shareholders have the authority to remove a director, they must adhere to legal and procedural requirements. It’s advisable to seek legal advice to ensure compliance with all relevant regulations and safeguard the interests of the company and its stakeholders.

Yes, you can make claims against directors under certain circumstances. Directors owe a fiduciary duty to act in the best interests of the company and its shareholders. If a director breaches their duties, such as mismanagement, fraud, director negligence, or wrongful trading, you may have grounds to bring a claim against them.

You can take legal action through various avenues, such as initiating a derivative claim on behalf of the company, pursuing a personal claim for damages, or seeking remedies like injunctive relief. The Companies Act 2006 and common law provide the legal framework for such claims. However, proving directorial wrongdoing can be complex, requiring evidence and legal expertise.

It’s advisable to consult a legal professional experienced in corporate law to assess the viability of your claim and guide you through the process, as successful claims can help recover losses or hold directors accountable for their actions.

Yes, directors can be held personally liable for negligence under certain circumstances. Directors have a duty of care and skill to act with a reasonable level of competence and prudence. If a director breaches this duty and their negligence leads to financial losses for the company or its stakeholders, they can be held personally responsible.

Shareholders, creditors, or the company itself may bring legal action against directors for negligence. While directors often have limited liability protection under company law, this protection doesn’t extend to cases of personal negligence, fraud, or certain statutory violations. In cases where a director is found liable for negligence, they may be required to compensate the company or affected parties for the resulting damages.

Directors should ensure they fulfil their duties diligently to minimise the risk of negligence claims. Consulting legal professionals familiar with corporate law can provide guidance on directorial responsibilities and potential liabilities.

Directors of a limited liability company are generally not personally liable for the company’s debts. The concept of limited liability means that the financial liability of directors is limited to the amount they have invested in the company or any personal guarantees they have provided. The company itself is considered a separate legal entity from its directors and shareholders.

However, there are exceptions to this principle. If directors engage in wrongful trading—continuing to operate the company when they know it cannot pay its debts—they can be held personally liable for any additional losses incurred during that period. Additionally, if directors provide personal guarantees for company loans or debts, they can be personally liable for those specific obligations.

It’s important for directors to understand their responsibilities and potential liabilities, and to act in accordance with their duties to avoid personal liability. Seeking legal advice can provide clarity on these matters and help directors navigate their roles effectively.

Remedies for a breach of duty by a director are legal actions aimed at holding the director accountable and mitigating the consequences of their actions. Such breaches can involve negligence, conflicts of interest, breach of directors’ powers or acts that harm the company or its stakeholders. Remedies may encompass:

• Damages: compensation can be sought to recover financial losses caused by the director’s breach of duty.
• Rescission: in certain cases, contracts entered into by a director in breach of their duties can be voided or rescinded.
• Injunctions: court orders can prevent a director from continuing actions that breach their duties or mandate specific corrective measures.
• Derivative claims: shareholders can bring legal actions on behalf of the company against directors to recover losses caused by their actions.
• Disqualification: directors who engage in serious breaches can be disqualified from serving as directors for a specific period.
• Account of profits: directors can be required to restore any personal gains acquired from their breach of fiduciary duties.

Seeking legal advice is crucial in determining the most appropriate remedy and navigating the complex legal landscape surrounding directorial breaches.