Directors’ duties, personal liability, and rights

Joshua Hobson, Solicitor

We have previously explored Directors’ duties under the Companies Act 2006 . Recent High Court decisions demonstrate the importance of understanding the applicable duties and rights that a director has and reinforces the significant consequences for directors who are in breach of such duties.

Director’s duties and conflicts of interest

In Del Bosque Limited v Amir Shafie [2026] the court considered allegations that a director had breached his statutory duties in relation to the appointment of an IT service provider.

The director had appointed a start-up business owned and operated by his father to provide IT services for the company. However, he failed to disclose his father’s involvement. Evidence put to the court showed that the appointed company had no meaningful resources of its own and intended to contract out the work to a third-party provider whilst retaining a significant mark-up.

The court found in doing so the director had failed to promote the success of the company, had not exercised reasonable care, skill and diligence, and had placed himself in a position of conflict without properly declaring that interest, breaching the duties set out in sections 172, 174, 175 and 177 of the Companies Act 2006. The court concluded that the directors’ actions were “deliberate and culpable”, and he was found personally liable for losses suffered by the company as a direct result of the breach of his statutory duties. Damages awarded were in excess of £53,000.

Key takeaways

The decision is a useful reminder of several important principles:

• directors’ duties are owed to the company itself. This obligation requires directors to act in the company’s best interest and to avoid allowing personal relationships to influence decision making;
• when considering whether a director has complied with their duties the court will look at what actually occurred in practice including the directors’ conduct and the wider context; and
• breach of director’s duties can result in personal liability and directors who fail to comply risk being required to compensate the company when losses arise from their conduct.

For directors, this is a practical lesson and serves as a reminder of the importance of identifying and declaring potential conflicts of interest. For shareholders, this decision is a reminder that the statutory duties in the Companies Act 2006 provide a route to challenge conduct where directors use their positions for the wrong reason.

The decision illustrates that the courts are willing to examine directors’ actions closely and impose personal liability where statutory duties have been breached.

Director’s rights to company information versus control of company assets

Mcilroy v Minaar [2026] is a useful reminder of the distinction between a director’s right to information and a director’s power to act on behalf of the company.

The case arose in the context of an unfair prejudice petition, where one director complained that he had been excluded from the company’s financial affairs and denied access to its bank accounts.

The court confirmed that directors have both statutory and common law rights to inspect the company’s books and accounting records. In other words, directors are entitled to understand the company’s financial position and scrutinise its affairs.

However, the court drew a clear line between visibility and control. A director’s right to inspect records does not automatically give them an individual right to operate the company’s bank account. As a general rule, company powers are exercised collectively by the board, not by directors acting alone.

The judgment also highlights the importance of directors’ duties under section 172 of the Companies Act 2006. If directors do not believe that granting unrestricted access to company funds is in the company’s best interests, they may be justified in refusing such access.

Key takeaways

The key takeaway being that directors are entitled to transparency, but not necessarily authority to control company assets. Good governance requires oversight, while decision-making remains a matter for the board as a whole.

If you require advice on directors’ duties, shareholder rights, and corporate governance issues, contact our corporate law team on 0161 832 3434, or at [email protected].

Contributors: Imogen Unwin