Mr Justice Hildyard gave judgment earlier this week in Allfiled UK Ltd v Eltis [2015] EWHC 1300 (Ch). The duties of directors, in particular section 175 ("Duty to avoid conflicts of interest") of the Companies Act 2006, were considered in the context of a claim for interlocutory injunctive relief. Of note is the position, accepted by Mr Justice Hildyard, that "...the rigour of fiduciary accountability may occasionally be abated where resignation has been forced upon the director and he or she has not actively sought to seduce the company's customers or to exploit any opportunity belonging to it" (para. [102]).
Thursday, 21 May 2015
UK: England and Wales: directors' duties and resignation
Mr Justice Hildyard gave judgment earlier this week in Allfiled UK Ltd v Eltis [2015] EWHC 1300 (Ch). The duties of directors, in particular section 175 ("Duty to avoid conflicts of interest") of the Companies Act 2006, were considered in the context of a claim for interlocutory injunctive relief. Of note is the position, accepted by Mr Justice Hildyard, that "...the rigour of fiduciary accountability may occasionally be abated where resignation has been forced upon the director and he or she has not actively sought to seduce the company's customers or to exploit any opportunity belonging to it" (para. [102]).
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This is an interesting judgment. Does Mr Justice Hildyard proceed to clarify the meaning of "not actively sought to seduce the company's customers or to exploit any opportunity belonging to it"? I would be interested to know what guidance has been provided.
In addition to the issue of s175 CA 2006 there are additional issues to consider for any solicitor dealing with such matters and which include: (i) post termination contractual restrictive covenants; and also (ii) any applicable confidentiality and intellectual property obligations, in any directors service agreement and also any shareholders agreement.
In addition to this there are also common law duties of confidence and also the duty of fidelity to factor into any wider legal analysis.
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