United Kingdom: Directors and Officers

A recent Supreme Court decision clarifies that directors who secretly pursue their own strategy rather than following board-agreed plans face significant personal liability risks, even when they genuinely believe their actions serve the company's best interests.

The Companies Act 2006 establishes a statutory framework allowing shareholders to remove directors through ordinary resolution, but the process involves complex procedural requirements and potential complications. Understanding the interplay between constitutional documents, shareholders' agreements, and employment contracts is crucial before initiating removal proceedings, as directors may possess weighted voting rights or contractual protections that significantly impact the outcome.

The Supreme Court has ruled that a director breached his fiduciary duty by concealing information from fellow board members during a company sale process, even though he genuinely believed his actions would maximize shareholder value. This landmark decision clarifies that directors cannot act unilaterally on significant matters and must involve the entire board in decision-making, regardless of their personal convictions about what serves the company's best interests.

The Court of Appeal examines whether shareholders suffered unfair prejudice when a director pursued property investment opportunities for his own benefit rather than offering them to the joint venture company.

In a recent decision, the High Court held that a sole director and the company he controlled could together be liable for the tort of unlawful means conspiracy: LUX Films Ltd v Fowler & Anor [2026] EWHC 963 (KB).

When most directors think of "distributions", they think dividends: a cash payment declared usually at year-end and paid to shareholders. Simple. But in reality, the legal definition is far broader.

Companies deploying artificial intelligence face heightened exposure to UK corporate criminal liability under the Economic Crime and Corporate Transparency Act 2023's failure to prevent fraud offence.

The High Court has held that a term sheet between a buyer and selling managers contained legally binding and enforceable obligations. It also found that warranties given by management reflected parallel representations, and that the buyer was entitled to bring a claim in misrepresentation.

HMRC has proposed sweeping new reporting requirements for close companies that would mandate detailed disclosure of all transactions with participators, extending far beyond the current framework which only captures loans triggering tax charges. The consultation raises critical questions about the burden on privately-owned groups and private equity structures, where intra-group transactions could generate extensive reporting obligations despite no underlying tax liability.