Friday, 1 June 2012

UK: England and Wales: breach of statutory duties by directors

Judgment was given earlier this week in Weavering Capital (UK) Ltd & Anor v Peterson & Ors [2012] EWHC 1480. The case has attracted a great deal of attention (see, e.g., here and here). From the company law perspective, the judgment is interesting because the trial judge was required to consider, amongst other things, whether directors of a hedge fund were liable for breach of their statutory duties under Part 10 of the Companies Act 2006 and, more specifically, section 174 (duty to exercise reasonable care, skill and diligence).

The trial judge, Proudman J., found that the directors had breached section 174 (and other duties) and, with regard to one director, rejected the argument that she should not be liable because of her limited role. In the words of the trial judge (at para. [174]): "The test is whether what Mrs Peterson [the director] did was that which a reasonable director of a hedge fund management company in her position, with her experience, actual knowledge and intelligence should have done, and whether she acquired a sufficient knowledge of WCUK's business to discharge her duties. In my view she did not meet that test".

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