Friday, 19 February 2021

UK: England and Wales: directors, bribery and section 176 of the Companies Act 2006

Judgment was delivered yesterday in Kings Security Systems Ltd v King & Anor [2021] EWHC 325 (Ch). While first instance, it is nevertheless noteworthy for the trial judge's discussion of whether the introduction of section 176 ("Duty not to accept benefits from third parties") of the Companies Act 2006 had removed the availability of tort based claims against a director in respect of bribery. The trial judge, Andrew Lenon QC, held that section 176 did not have this effect, observing that if section 176 had indeed removed the ability to bring such claims:

.... the liability of the briber and the liability of the bribed director would be governed by different rules. In the absence of clear words, I do not consider that this was the intention of the legislator. Even if the effect of section 170(3) is to substitute the general duties for the tort of bribery ... section 170(4) provides that 'the general duties shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties.' The law relating to bribery therefore remains relevant. Advancing a separate cause of action in bribery where there are grounds for claiming a breach of section 176 of the 2006 Act may, however, add nothing more than colour". 

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