Corporate law update: 18 - 24 July

This week:

• A director breached his duties to a company when he deliberately concealed information from his fellow directors, even though he believed he was acting in the company’s best interests
• Other items of interest

Court examines test for good faith when discharging directors’ duties

The Supreme Court has held that a director of a company breached his duty under section 172 of the Companies Act 2006 when he failed to involve his fellow directors – and concealed information from them – regarding the process for achieving an exit, even though he genuinely believed it was the best course of action.

Saxon Woods Investments Ltd v Costa [2025] EWCA Civ 708 concerned a company owned by several investors. These included Mr Costa and Mr Uberoi, who were also directors.

The company and its shareholders had entered into a shareholders’ agreement (SHA), which committed the company and its investors to work together in good faith towards an exit no later than 31 December 2019.

Mr Costa and Mr Uberoi instructed a financial adviser to run a process to realise value in the company. In practice, Mr Costa controlled the sale process, liaising with the financial adviser and feeding only selected information back to the board.

The Supreme Court found that, by deliberately withholding information from his fellow directors and by unilaterally pursuing a course without involving the rest of the board, Mr Costa had breached his duties to the company, including his duty under section 172.

It held that a director’s duty under section 172 incorporates an element of good faith, which involves acting collectively with other board members and not concealing information from them. It does not give a director licence to do anything they want provided the director genuinely believes it will promote the company’s success.

The court also found that it is possible to act honestly and yet not be acting in good faith. Dishonesty is one element to consider when deciding whether a director has acted in good faith, but only as part of a broader, holistic assessment of the fiduciary duty of loyalty.

The court’s comments clarify that a director should be careful of withholding information from their fellow directors, even if they believe that to do so is the better course of action and is more likely to promote the company’s success.

You can read our separate article for more on the court’s decision that a director breached his duties when he took action unilaterally and deliberately withheld information from his fellow directors.

Other items

• Takeover Panel publishes annual report. The Takeover Panel has published its annual report and accounts for its 2025/2026 financial year. The report sets out the Panel’s finances for the year, as well as key activities and developments.

  Access the Takeover Panel’s 2025/2026 annual report and accounts (opens PDF)

• London Stock Exchange to launch 24-hour stock market. The London Stock Exchange (LSE) has announced plans to launch LSE 24, a new trading venue that will operate 24 hours a day, Monday to Friday. The new market will be designed to support digital, algorithmic and agentic trading and will run separately from the LSE’s Main Market (which will continue to operate its existing trading hours). LSE 24 will enter a testing phase by the end of 2026, with the LSE intending to launch the first asset class in H1 2027.

  Read the London Stock Exchange’s announcement of new 24-hour trading venue LSE 24

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