Director Duties

October 11th, 2022 by James Goudie KC

In BTI 2014 LLC v SEQUANA (2022 UKSC 25 the Supreme Court say that Directors owe their duties to the company, rather than directly to shareholders or creditors of the company. There is not a free-standing duty owed to creditors. However, where the company is insolvent, or bordering on insolvency, then the interests of creditors as a general body should be considered even if , and balanced against the interests of shareholders. The greater the company’s financial difficulties the more  the directors should prioritise the interests of creditors when making for example to  pay a dividend and if so how much. Once insolvency is inevitable the  creditors’ interests become paramount.

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