The Power Struggle: When Shareholder Powers And Directors’ Duties Collide

Are you both a director and shareholder of a company? Abigail Owen, Corporate Partner at law firm Rawlison Butler, highlights the findings from a recent Court case which is a firm reminder that these are two very different positions.

A director-shareholder may think they have two separate identities, one as a director and the other as a shareholder, and that when they act as a shareholder they are free from their obligations as a director and vice versa. This is not the position however, unless there are specific carve-outs within their shareholders' agreement and, as such director-shareholders should be wary of any potential conflicts between their powers as a shareholder and duties as a director.