International Corporation Law Class Discussion

Question: Discuss the codification of directors duties? Answer: Introduction The Companies Act 2006 introduced a codification of the directors duties. With this codification, the directors common law fiduciary duties have been placed on a legislative footing for the first time. These duties legally bind all directors including those who have been formally appointed, the de facto directors as well as the shadow directors. In this discussion paper, we shall try to evaluate whether the codification of the directors duties has been helpful or not[1]. We shall also compare the scenario with that of the situation in Australian jurisdiction under the Corporation Act. Negative views Going through the provisions of the law, we can say that the codification of the duties of the directors was an unnecessary step. The duties that have been codified do not differ from the equitable and common law counterparts to a great extent. They simply intend to place the existing laws under the common law principles into a codified aspect and in order to find out if a breach has in fact been committed by the directors or not, the courts as well as the Judges will have to refer back to pre-2006 case laws[2]. Those case laws have been founded not on the codified law but on the common law principles. One who is a layman will simply find the codified law to be a mere documentation of the already existing common law rules and nothing more than that. Positive views Of course, one might argue that the codification will lead to a statutory requirement, yet the precedents and the previous occasions definitely and clearly point to the way that these aspects had been very lucrative and lucid in the preceding years as well. The intention of the legislature behind this codification was to achieve a higher sense of duty and a better clarity f the position of todays company directors. Comparison with the world We shall now discuss if this is at par with the situation in other countries or jurisdictions across the globe. In India, with the incorporation of the revised company law in 2013, the directors duties have been given a new phase in it. The directors have been criminally liable under the new legislation for breach of their duties[3]. Comparison with Australia Coming to compare the situation with the Australian Corporation Act, we can say that the legislation is Australia is much different because there, the duties that are conferred are having a much wider access transgressing the border of the customary principles of common law. While on one hand, the law in United Kingdom is just a codified form of the already in existence laws but in other jurisdictions (particularly Australia), the law specifically provides the wide extent to which the liability of the Directors along with other officials of the company extends to. Moreover, after analyzing a few cases in both the jurisdictions, it can be said that the codification of this particular area was not at all necessary[4]. The system was running smooth enough to meet the principles of justice. Conclusion The law which aimed to codify directors duties has not been able to meet the standard that it aimed at by the legislators. References Azmi R and Abd Razak A, 'Paradigm Shift Or Mere Codification Of Law: A Review Of Directors Duties In Malaysia' (2012) 38 Commonwealth Law Bulletin Nordberg D and McNulty T, 'Creating Better Boards Through Codification: Possibilities And Limitations In UK Corporate Governance, 19922010' (2013) 55 Business History Overland J, 'Liability For Insider Trading: Learning Lessons From Australia' (2009) 2 International Journal of Private Law Riley C, 'Company Law Whither UK Corporate Governance?' (2012) 1997 ac [1] Juliette Overland, 'Liability For Insider Trading: Learning Lessons From Australia' (2009) 2 International Journal of Private Law. [2] Donald Nordberg and Terry McNulty, 'Creating Better Boards Through Codification: Possibilities And Limitations In UK Corporate Governance, 19922010' (2013) 55 Business History. [3] C. A. Riley, 'Company Law Whither UK Corporate Governance?' (2012) 1997 ac. [4] Ruzita Azmi and Adilah Abd Razak, 'Paradigm Shift Or Mere Codification Of Law: A Review Of Directors Duties In Malaysia' (2012) 38 Commonwealth Law Bulletin.