The CDDA 1986 has had an important impact on the development of the law relating to directors’ duties. Many of the leading cases on the duties in recent years have been in the context of disqualification proceedings under the CDDA. In determining whether a person is unfit to be concerned in the management of a company and therefore should be disqualified under Section 6, the court has regard to the matters set out in Part 1 of Schedule 1, one of which is: “any misfeasance or breach of any fiduciary or other duty by the director in relation to the company”. The disqualification cases provide a rich harvest of instances of wrongful conduct, ostensibly in the context of a failed enterprise, which are useful in helping a director decide what he should or should not do in respect to a company which is still a going concern. A discussion on disqualification, with a recitation of a good spread of the more recent authorities, has therefore been included at the end of this narrative (Ch 12). There remains the question of the interrelationship between the new statutory rules and the types of conduct which courts find relevant in considering whether a director should be disqualified from office. For instance, will the reference to “any misfeasance or breach of fiduciary or any other duty” require an examination on a CDDA application of the new general statutory duties, or can the courts look at other circumstances or the pre-existing law? Conversely, can the disqualification cases continue to be an indirect “source” of ascertaining corporate wrongdoing, ie of interpretative value for the purposes of CA 2006, s 170? Because of the open nature of these questions it remains pertinent to examine the case law both before and after the adoption of the new code.

Also, s 172(3) (discussed below) recognises that the duty to promote the success of the company is displaced when the company becomes insolvent. Section 214 of the Insolvency Act 1986 provides a mechanism under which the liquidator can require the directors to contribute personally towards the funds available to creditors in an insolvent winding-up, where they ought to have recognised that the company had no reasonable prospect of avoiding insolvent liquidation and then failed to take all steps to minimise the loss to creditors. it has been suggested that the duty to promote the success of the company may need to be modified by an obligation to have regard to the interests of creditors as the company nears insolvency. The Government intends to allow the law to develop in the area.

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