You are instructed by a leading international law firm to prepare a memorandum of advice setting out the various duties that an executive director might owe to his company under English law

International Corporate Law and Practice

Assessment

 Candidates must submit a final draft of their Memorandum of Advice for the Module in (International Corporate Law and Practice) together with the completed Assessment Submission Sheet, in accordance with the Memorandum of Advice Assessment Submission Instructions, no later than 4pm, Monday, 27th March 2023.The Memorandum of Advice is worth 30 per cent of the total marks available for the module in (International Corporate Law and Practice)You are instructed by a leading international law firm to prepare a memorandum of advice setting out the various duties that an executive director might owe to his company under English law

 The Memorandum of Advice (including any attachments) should not exceed 3,000 words.

 As the Memorandum should be drafted and written in a practical style (with numbered paragraphs) it is not necessary to include a bibliography. Advice on the writing of a memorandum is available on the VLE (LLM Programme Information and Dissertations tab).

 Please note that no extension or deferral of this assessment can be authorised other than in strict accordance with the General Academic Regulations (available on the VLE) and pursuant to an application on the required form supported by independent evidence.

 This assessment is unsupervised. However, for guidance please refer to the notes and recordings on the VLE (LLM Programme Information and Dissertations tab – MoA Assessments).


LLM IN INTERNATIONAL CORPORATE LAW AND PRACTICE  ASSESSMENT

MEMORANDUM OF ADVICE 

You are instructed by a leading international law firm to prepare a memorandum of advice setting out the various duties that an executive director might owe to his company under English law and to further consider and advise on whether there are any circumstances in which a director might owe duties to the shareholders, individually or collectively. Your advice should address not only statutory duties but also those in the general law.

 

Plagiarised (Do not copy)

To: [International Law Firm]

From: [Your Name], Legal Advisor

Date: [Current Date]

Subject: Duties of an Executive Director under English Law


1. Introduction

1.1 This memorandum sets out the various duties that an executive director might owe to his company under English law.

1.2 It also considers the circumstances in which a director might owe duties to the shareholders, individually or collectively, addressing both statutory and general law duties.

2. Statutory Duties under the Companies Act 2006

2.1 The Companies Act 2006 codifies several key duties that directors owe to their companies. These statutory duties replace many of the common law and equitable principles that existed before the Act.

2.1.1 Duty to Act Within Powers (Section 171)

2.2 Directors must act in accordance with the company’s constitution and must only exercise powers for the purposes for which they are conferred.

2.1.2 Duty to Promote the Success of the Company (Section 172)

2.3 Directors are required to act in a way they consider, in good faith, to promote the success of the company for the benefit of its members as a whole. This includes considering long-term consequences, employee interests, the need to foster business relationships, the impact on the community and environment, maintaining a reputation for high standards of business conduct, and the need to act fairly between members.

2.1.3 Duty to Exercise Independent Judgment (Section 173)

2.4 Directors must exercise independent judgment and not fetter their discretion unless authorized by the company`s constitution.

2.1.4 Duty to Exercise Reasonable Care, Skill, and Diligence (Section 174)

2.5 Directors must exercise the care, skill, and diligence that would be exercised by a reasonably diligent person with both (a) the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the functions of a director in relation to the company, and (b) the general knowledge, skill, and experience that the director has.

2.1.5 Duty to Avoid Conflicts of Interest (Section 175)

2.6 Directors must avoid situations in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

2.1.6 Duty Not to Accept Benefits from Third Parties (Section 176)

2.7 Directors must not accept any benefit from a third party conferred by reason of their being a director or their doing (or not doing) anything as a director.

2.1.7 Duty to Declare Interest in Proposed Transaction or Arrangement (Section 177)

2.8 Directors must declare the nature and extent of any interest, direct or indirect, in a proposed transaction or arrangement with the company.

3. General Law Duties

3.1 In addition to the statutory duties codified in the Companies Act 2006, directors are also bound by certain duties under general law, which continue to apply where they do not conflict with the statutory duties.

3.1.1 Fiduciary Duties

3.2 Fiduciary duties are derived from principles of trust and confidence, obligating directors to act in the best interest of the company and avoid self-dealing and conflicts of interest.

3.1.2 Common Law Duties of Care and Skill

3.3 Directors must perform their role with a level of care, skill, and diligence appropriate to their position, aligning closely with the statutory duty under Section 174.

4. Duties to Shareholders

4.1 Under normal circumstances, directors owe their duties to the company, not to individual shareholders. However, there are exceptions where directors may owe duties to shareholders:

4.1.1 Special Circumstances

4.2 Directors may owe duties to shareholders where:

  • There is a fiduciary relationship between the director and the shareholder.
  • The company is in financial difficulty, and the directors are effectively managing the company for the benefit of its creditors.

4.1.2 Unfair Prejudice

4.3 Shareholders may bring a claim under Section 994 of the Companies Act 2006 if they believe the company’s affairs are being conducted in a manner unfairly prejudicial to their interests.

4.1.3 Derivative Actions

4.4 Shareholders may also bring a derivative action on behalf of the company under Sections 260-264 of the Companies Act 2006 for a breach of duty by the directors.

5. Conclusion

5.1 The statutory and general law duties outlined above ensure that directors act in the best interests of their company and maintain high standards of corporate governance.

5.2 While directors primarily owe duties to the company, there are specific circumstances under which they may owe duties to shareholders, particularly in cases of unfair prejudice or when the company is nearing insolvency.

5.3 It is crucial for directors to be aware of these duties to avoid personal liability and ensure they are fulfilling their roles effectively and in compliance with the law.


[Your Name] Legal Advisor

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