Placing directors' duties on a
statutory footing opened the floodgates for debate about interpretation of
these duties as to whether the new statutory duties conflicted with the
old common law duties.
However, an overlooked issue is the
way in which fiduciary duties are applied. The statutory duties ignores the
distinction between executives and non-executives on the premise that
parliament do not want directors falling in to less onerous categories. But
this presumes directors owe fiduciary duties because they are directors. This
seems contradictory to the well established notion articulated by the then
Dr Finn that a person "is not subject to fiduciary obligations
because he is a fiduciary; it is because he is subject to them that he is a
fiduciary" (see Bristol and West Building Society v Mothew 
Ch 1 at 18).
view comes across in other judicial statements such as Henderson v Merret
Syndicates Ltd (No 1)  2 AC 145 HL at 205 where Lord Browne-Wilkinson
stated that duties do not arise from a person's status or description.
Similarly in America in the case of Chenery Corporation 318 US 80 *85-6
(1943) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] it was stated that
to call someone a fiduciary was only the beginning of the analysis.
What the statutory duties
potentially do is assume that all directors owe the same duties once they have
been determined as a director. This creates the assumption that directors are
fiduciaries because of their status rather than their nature or their nature of
relationship with the company/principal. It also creates the assumption all
directors owe the same duties although there is considerable doubt over this
If one looks to what determines a
director the case law is relatively clear that being "held" out as a
director - at least in terms of de facto directors - does not make you a
director. The courts have preferred an "equal footing" test to
determine whether someone is a director - Kaytech International, Re
 BCC 390. This basically looks to see whether the individual has assumed
the functions of a director and is a fact sensitive situation.
With this in mind if the law
determines a director by their functions on a purely fact sensitive basis,
imposing duties by law ignores the specific nature of the relationship. Thus
Part 10 of the Companies Act 2006 subscribes to the idea that the fiduciary
duties are prophylactic and imposed by law designed to react to someone
assuming the role of director; rather than to reflect on the nature of the
These are very much some early
thoughts and need to be developed further. If the legislation is
suggesting, and I find no evidence yet to say otherwise, that all
directors owe the same duties under part 10 is important to remember that
although they are held to the same standard, the application of that duty will
differ depending on whether they were executive or non-executive - Equitable
Life Assurance Society v Bowley  EWHC 2263 at .
For more commentary on directors' duties and shareholder litigation,
visit Gibbs: Law
and Life, a blog centering on directors' duties and company law,
particularly on interpretation and practicality of directors' duties in the
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