Speaking too Soon?? The ‘Old – Guard’

It would appear that, as sure as the sun doth rise – the debate over Rangers past shall continue. In the past week Craig Whyte has released a trendy niche of sound bites in relation to the ormer Ibrox rear-guard, and by this I do not refer to Messer’s Gough and Brown.

The slagging match continues; and I use the word ‘slagging with’ deft apt: that’s all that it is.

Day after day Mr Johnston feels the need to repeat himself with an almost Tourette’s style ring on matters of his ‘concern’ regarding Mr Whytes takeover. Indeed this is the man that, along with Martin Bain, released a statement on the day of the takeover by Mr Whyte to render him as unfit to lead the club forward. A document that essentially nailed the coffin shut on his tenure on the Ibrox hierarchy.

My concern is that this was martyrdom after the war. Instead of voicing his concerns previous to the takeover he in fact praised Mr Whyte as a man to lead the club forward in future times. This is something that many often forget. He also formed part of the independent review board or similarly named group that presided over the takeover in ‘the best interests of the club’. A toothless tiger of a committee that were barrel bent by the baying Lloyds banking group who stood goading Rangers into commitment to Craig Whyte whilst holding their hand over the plug that provided the essential lifeline to an already critical institution.

At times the takeover by Mr Whyte was almost secured by Lloyds bank – to the point of extortion. (Personal opinion yadda yadda, disclaimer).

One thing that has come out in recent weeks from Craig Whyte is that fact that during the Murray era many Directors of the company were under the muse of EBT systems that are the heavy grey cloud that currently overhang the clubs shadow.

The question that I have is quite how pivotal this information actually is.

It is glaringly obvious to many that Mr Johnston and Mr P. Murray are very press happy in recent times. Probably more so than in their whole entire lives leading up to this point. Dare I say it; it’s verging on brown nosing, and the press are lapping it up…40p at a time.

The view is that John McClellan and Martin Bain were both complicit in the EBT system – whilst serving as Directors. My guess and it is only my guess is that they were not alone. I’d say every director of that company, at that period in time – were complicit in the EBT scheme. Which is fine really – I mean, so was almost every company Director up and down the land that had any idea such a system existed. Not that they will admit to such. Rangers were far from unique. In fact if you go on to the HMRC webpage there is information on how to settle if you have such a guilty conscience; and that wasn’t put there for the single sake of Glasgow Rangers.

The point that I am going to make is how, as a company director – perhaps such a scheme should not have been used. But why it probably was anyway.

The duties of a company director were are set out in the companies act 2006, completely codified.

Notwithstanding the codification of directors’ duties by CA 06, the current common law position will still be of importance in understanding  the new codification given that the common law duties have in essence been incorporated into the Act

              What were these common law duties?

(i)              To act in good faith and in the best interests of the company – When exercising their powers directors had to act not only in good faith and honestly, but also in the best interests of the company without ulterior motive. Provided a director’s motives were honest and he, or she genuinely believed that the action taken was in the best interests of the company, they would not normally be subject to claims that they should have acted differently. However, even this was not enough if the transaction was outside the scope of the company’s objects as contained in the company’s memorandum of association; or if a personal profit was made by the director (even if the company also benefited), or if the director did not declare his interest in the transaction to the company.

This duty was akin to the fiduciary duties owed by trustees; the director was in fact in a position of trust towards both the company and its shareholders. If a director were allowed to make a personal profit when dealing with the company’s property, this would amount to a conflict of interest. The director had to act for the benefit of the company, not himself.

This rule was over the years interpreted by the courts in some circumstances rigidly. For example in the case of Aberdeen Railway Co. v Blaikie (1854) 1 MacQ. 416 (HL) the chairman of the railway company was also a partner in another company that supplied equipment to the railway company. Despite the fact that there was no suggestion of any improper behaviour by the chairman it was held by the court that he had breached his fiduciary duty to the railway company given that it was his duty as a director of that company to obtain the lowest price possible for the supply of goods, whereas as a partner of the other firm supplying the railway company he would have sought to obtain the highest price possible – conflict of interest! The result of the case was that the chairman was required to repay to the railway company the amount of the unauthorised benefit he had received.

Avoid conflicts of interest – Directors could not put themselves in a position where there was an actual or a potential conflict between their personal interest and their duty to the company. A conflict of interest could arise where a director sought to exploit the assets or opportunities of the company for his or her own benefit.

The effect of this was that a director could not enter into a contract (other than a service contract) with the company, unless the company gave its approval in general meeting or the articles of association permitted it. Conflicts of interest and duty could, for example, arise in relation to property transactions, loans and insider dealing.

It is important to note that if a client was both a director and a shareholder of a company, these are two distinct and separate roles and a director could not let their decisions as a director be swayed by the fact that they were also a shareholder.

The courts did however on other occasions over the years adapt their interpretation of the fiduciary duty to take account of the social climate. The courts indicated that although the fiduciary duty was a uniform and universal duty it did not preclude a director from being involved in the business of another competing company. Nor indeed did it prevent a director from taking advantage of a business opportunity that has been rejected in good faith by the company of which he was a director.

There were however obvious difficulties of interpretation over what was or was not a decision made in good faith. This involved considering whether the director had used his power for its proper purpose, namely the benefit of the company.

The fiduciary duty covered matters such as misappropriation of company property, exercising powers for an improper purpose and preventing a director from profiting, or being in conflict with their position as director. The overriding duty was to act bona fide in the best interests of the company. Attempts by directors to circumvent their duties by amending the company constitution were commonplace. This led to statutory intervention, primarily encapsulated in the complex provisions of Part X of the Companies Act 1985.

(ii)             Duties of skill and care – Directors had to exercise skill and care in carrying out their duties. They were not expected to be experts in relation to the company’s business but they did need to show the level of degree of skill than could be expected from a person of their knowledge and experience (a specialist qualification could therefore impose a greater degree of care).

They were entitled to trust their fellow directors and specialists or experts (Baxendale walker?), unless they were, or should have been, on notice that something was wrong.

At common law this duty of skill and care was not to act negligently in managing the company affairs. The standard of care expected was that of a reasonable man. Again however matters have moved on and as indicated above the standard of care that has come to be expected, could be determined by the type of director. A director was expected to have a level of competence in one’s own field. Executive directors, given their day to day involvement in the company’s management had a higher objective standard of care, but non-executives appointed for their experience, or qualifications, may have had high a standard expected of them.

The position of directors and to whom they owe their duty has been and continues to be the subject of much debate. Previously directors were thought to owe their duty to the company alone. Both the UK courts and Parliament have extended the scope of directors’ interests. These developments indicated that directors’ duties had moved away from being seen as solely owed to the shareholders and that when a company was in financial difficulties competing interests required to be considered.

Contractual duties can be tailored to fit the individual director, but the general duty of care and skill was more generalised by its very nature. The Courts have generally speaking considered the standard expected of a director not to be that high, on the basis that the shareholder’s selected their directors and if the directors failed in their duty then the loss should fall on the shareholders and it was not for the courts to interfere.

The crooked director was assisted greatly by Buckley, J’s “sunshine test”, detailed in Re White & Osmond [1960] unreported, where he said “there is nothing to say that directors who genuinely believe that the clouds will roll away and the sunshine of prosperity will shine upon them and disperse the fog of their depression are not entitled to incur credit to help them get over that bad time.”

              The standard of care?

Historically a low standard of skill and care has been expected of directors, with few cases ever coming to court, partially due to difficulties in enforcing that duty. Courts considered that decisions to raise court actions should be the function of the board, but as was often the case it was the wrongdoers who controlled both the board and the general meeting. This led to parliamentary intervention and the development of what was the section 459 CA 85 remedy – now section 994 CA 06 providing a level of protection for minority shareholders in relation to unfair prejudice; mere mismanagement in itself does not amount to unfairly prejudicial conduct.

Romer J, in Re City Equitable Fire Insurance Co [1925] 1 Ch 407, set out the classic statement on the duty of skill and care that was expected of a director, namely that “a director need not exhibit in the performance of his duties a greater degree of skill than may be reasonably expected from a person of his knowledge and experience”. This was a subjective test, although reference to what is reasonably expected was tested by reference to the director’s own knowledge and experience, rather than by referring to the director’s tasks as a truly objective test.

The problem with the Re City Equitable test is that it leads to the conclusion that incompetence could be a defence. The ignorant and unskilled are judged by their own standards and the skilled are penalised for being skilled. The decision of the court however has to be considered in the light of the times.

The court’s difficulty over the years has been to provide a test that would encompass the wide variety of skills needed by a director to perform his functions, to deter mismanagement whilst at the same time not discouraging risk-taking, which is after all part of the nature of business.

The wrongful trading remedy contained in the Insolvency Act 1986 [“IA 86”] appeared to have provided the necessary direction in this area. This legislation was a direct result of the Report of the United Kingdom Review Committee on Insolvency Law and Practice in 1982, which conceded that a balance required to be struck between encouraging growth, discouraging irresponsible elements and ensuring that those prepared to abuse the system of limited liability could be held liable for the consequences of their actions or conduct.

Section 214 IA 86, imposes personal liability on a director to make a contribution towards the company’s debts at a level decided by the courts. Section 214 IA 86 amounted to a significant shift from the subjective standard imposed by Re City Equitable. It created objectivity over and above the subjective element and as a consequence inexperience was no defence, but in its place we had a system whereby a highly skilled or experienced director would be judged by his personal standards.

Section 214 however relates to wrongful trading proceedings instigated by a liquidator. It was not directed at the general duty of care owed by directors whilst a company was solvent. At least that is not until the decisions of Hoffman, J in Norman v Theodore Goddard [1991] BCLC 1028 and Re D’Jan of London Ltd [1994] BCLC 561.

In both of these cases Hoffman equated the common law duty of skill and care with the test to be applied in section 214 IA 86, namely that a director would be liable if he “knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation”, unless the court was satisfied the director concerned “took every step with a view to minimising the potential loss to the company’s creditors as … he ought to have taken”.

The standard therefore to be used was that of “a reasonably diligent person having both –

(a)            the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and

(b)            the general knowledge, skill and experience that the director has.”

What Hoffman was indicating was that business does involve an element of risk, but that those running the business had to temper their risk-taking not just when the company was about to go insolvent, but throughout the life of the company. In Re D’Jan he stated “people often take risks in circumstances in which it was not necessary or reasonable to do so. If the risk materialises, they may have to pay a penalty.”

This was the application of both a subjective and objective test, which the learned judge indicated was entirely applicable to not only an insolvent liquidation, but was also applicable throughout a company’s life. The use of this dual standard enabled the court to differentiate between directors according to their job descriptions, but more importantly it was seen as a minimum standard that could be adjusted in line with any special skills attributable to a particular director, without the possibility of a downward adjustment for the totally incompetent director. The Law Commissions for both England & Wales and for Scotland supported the view that these court decisions should reflect the common law position.

This shift in the law has also been strengthened through use of the Company Directors Disqualification Act 1986 (CDDA). The CDDA is primarily concerned with the disqualification of directors, who as a result of their conduct are deemed to be unfit to be concerned in the management of a company. Schedule 1 Part 1, paragraph 1 of the CDDA makes reference to breaches of “any fiduciary duty or other duty by the director in relation to the company”, which could be taken to include the duty of skill and care in the determination as to whether a director is unfit. These court decisions and the introduction of legislation were all indicative of the fact that higher standards of conduct were being demanded from company directors.

These developments are probably best illustrated by the case of Re Barings plc (No 5) [1999] 1 BCLC 433, one of the many cases to evolve from the collapse of Barings Bank. In that case, Jonathan Parker, LJ narrated three propositions:-

(i)              directors to be able to perform their duties, have a continuing collective and individual duty to acquire and maintain a sufficient knowledge and understanding of their business,

(ii)             directors can delegate and trust to a reasonable extent to those to whom they delegate, but they are not absolved from their duty to supervise, and

(iii) the scope of the duty and whether it has been discharged will depend on the facts of each case.

These propositions involved an objective assessment of what a director should reasonably be expected to do. It was a reinforcement of the position suggested by section 214 IA 1986. No differentiation was made here between executive directors and non-executive ones, on the basis that the Board of Directors is under an obligation to act as a collective unit. The non-executive, who is unlikely to be involved in the day to day operations of a company, needs to ensure that effective control systems are in place and that they are operating. The non-executive bears as mush responsibility for a company’s actions as the executive director. The fact that the role of the non-executive as a check on potential abuses by the executive director has increased – for a good synopsis on what the role of the non-executive should be see the “Higgs Review of the role and effectiveness of non-executive directors” (January 2003) – only serves to reinforce the belief that the more is now expected of our directors in the way in which they perform their duties.

The Company Law Review considered the role of the director and concluded that there needed to be clarification of what the role of the director was, including in whose interests the company was being run. They considered that the law had to be more accessible and predictable. This led to the introduction of the first statutory statement of directors’ duties in the CA 06.

              The CA 2006 and the Codification of Directors’ Duties – sections 170 – 177

It should be noted from the outset that the following duties are owed by the director to the company; it is therefore only if the company collectively feels strongly about the issue that the director will be brought to account, although in certain situations it may be possible for a shareholder to raise a derivative action or claim under the unfair prejudice remedy.

 

Duty 1 – section 171 CA 06: to act within powers

In terms of this duty the director must act within the terms of the company’s constitution and only exercise those powers for the purposes they were conferred. It is open to a company to impose onerous duties on the directors through provisions in the Articles, but the Articles cannot lessen the impact of the statutory duties, except in limited circumstances. For example in terms of section 173 CA 06 a director would not be in breach of the duty to show independent judgement if he acted in a manner authorised by the Articles.

Duty 2 – section 172 CA 06: to promote the success of the company

A director is obliged to “act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of the members as a whole, and in doing so have regard to certain matters”, namely:

(i)                  the likely consequences of any decision in the long term;

Are the Rangers directors guilty of something here? In the long term: EBT’s look to potentially hang the club from the rafters. If the Directors were so complicit in the scheme should they really be in any position to comment. I don’t remember any of the Director resignations being in relation to ‘feeling guilty/fucked up in my duties’

(ii)                 the interests of the company’s employees;

Hardly a shining example if the companies employees could find themselves subject to compulsory redundancy to put it politely; and without the payoff.

(iii)                the need to foster the company’s business relationships with suppliers, customers and others;

(iv)            the impact of the company’s operations on the community and the environment;

(v)             the desirability of the company maintaining a reputation for high standards of business conduct; and

(vi)            the need to act fairly as between members of the company.

The Government was of the view that it was not enough for a company to simply take account of the shareholders’ interests, but that it had to widen matters to take account of other stakeholder’s interests.

How then is this duty to promote the success of the company to be effected? The wording of the Act implies a subjective test – “in the way he considers”, and yet it also implies an objective test by stating that a director is to “have regard” to certain matters. It will be interesting to see how the courts interpret these matters. For example to what extent does a director have to “have regard” to a matter? What if the director pays regard to a matter and then makes a decision that adversely affects one of the parties detailed in section 172?

It may be necessary for board minutes to be clearly recorded for a director to prove that they clearly had regard for a matter. I don’t remember, because I doubt they exist, having seen any of those ideas released to shareholders!

The Government’s view was that the matters covered in section 172 were all issues that the modern director should be taking account of and that if they did take account of these issues it would lead to better prosperity for the company and all those involved with it, namely the shareholders, the employees, the creditors, and the community at large. However there are those who would suggest that it will not make a dramatic difference since the duty is owed to the company and not to these other stakeholders, and for a duty to be useful it needs to be enforceable. Is this why the former board have such open jaws in the press?

Whilst the concept of corporate social responsibility may be more topical today in relation to Rangers as a public footballing istitution and the intention may be to allow for every “stakeholder” to have an input that does not automatically mean it can be legislated for.

 

Duty 3 – section 173 CA 06: to exercise independent judgement

A director is obliged to exercise his own judgement and not follow others’ decisions, except where the company has already entered an agreement to fetter the director’s discretion, or the company’s constitution authorises such restriction. This duty does not prevent a director from taking advice where appropriate (the Model articles permit delegation), but at the end of the day the director must exercise their own independent judgement, following receipt of that advice.

This duty will obviously cause some difficulties for nominee directors who have been appointed to represent the interest of a particular shareholder.

Duty 4 – section 174 CA 06: to exercise reasonable skill, care and diligence

This duty sets a minimum standard required by a director, with the standard expected increasing if the director concerned has a higher standard of general knowledge, skill or experience.

A director is expected to exercise the standard of skill etc exercised by a reasonable diligent person with:

“(a)          the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as the director in relation to that company, and

(b)            the general knowledge, skill and experience that the director actually has.”

The first paragraph imposes an objective test and the second paragraph imposes a subjective test. The CA 06 follows the principles established under case law and the wrongful trading measure imposed under section 214 IA 86 mentioned above.

Duty 5 – section 175 CA 06: to avoid a conflict of interest

A director has to avoid a situation where either directly or indirectly he would have a conflict of interest with the interests of the company. He must not exploit information, property or an opportunity of the company’s, and this will apply even after the director has left office provided he became aware of the information, property or opportunity whilst he was in office.

This duty does not extend to personal transactions, or arrangements with the company. It should also be noted that the conflict provisions do not apply where it “cannot reasonably be regarded as likely to give rise to a conflict of interest”. A conflict of interest includes both a conflict of interest and a conflict of duties.

The Act identifies three situations where there is the potential for conflict, namely:

i.                Conflicts in relation to transactions where the company is not a party –  exploiting an opportunity;

ii.              Conflicts in relation to proposed transactions where the company will be a party; and

iii.             Conflicts in relation to existing transactions to which the company is a party

(i)              Transactions/arrangements where the company is not a party – the idea here is to prevent directors from benefiting personally at the expense of the company, or to prevent a potential conflict even if the director were to gain nothing personally. The CA 06 allows directors to authorise this type of conflict – under the CA 85 only shareholders could do this.  If the directors are requested to authorise the conflict then they may do so if it is a private company and there is nothing in the company’s constitution which prevents such authorisation; if it is a public company then the company’s constitution must specifically allow the directors to authorise it; irrespective of whether it is a public or private company only those directors who are not involved in the conflict may participate in the vote. In exercising their judgement at the vote directors will have to be mindful of their other statutory duties, such as to promote the success of the company etc.

(ii)             Transactions/ arrangements where the company will be a party – the director must declare both the nature and extent of the interest. It should be noted that this means that the director only has to declare his interest before the transaction is entered into, and this may not necessarily be the first time the matter is discussed – it is possible for the company Articles to contain strict provisions on when a director should declare their interest.

(iv)                Transactions/ arrangements where the company is a party – where a director has either a direct or indirect interest in any proposed transaction or arrangement with the company, and the company is a party to the transaction, he must declare the nature and the extent of that interest to his fellow directors. Again it should be noted that this means that the director only has to declare his interest before the transaction is entered into, and this may not necessarily be the first time the matter is discussed – it is possible for the company Articles to contain strict provisions on when a director should declare their interest.

I won’t give too much personal say on this; rather let people make up their own minds on the matter.

 

Duty 6 – section 176 CA 06: not to accept benefits from third parties

The CA 06 permits a director to accept benefits from third parties but only if it is authorised by the shareholders, or if it “cannot reasonably be regarded as likely to give rise to a conflict of interest.” Given that there is no minimum threshold stipulated in the act difficulties over corporate hospitality may arise. How do we measure whether the benefit gives rise to a conflict of interest? Do we assess the value of the benefit, or do we examine the subjective wealth of the director receiving the benefit? The CA 06 does not provide us with the answers.

This duty is in effect a no secret profit rule, and it is important to note that this duty will continue after the director has left office, if the benefit accrued through his directorship. It should also be noted that section 176 does not prevent benefits being conferred on the director by the company itself.

Duty 7 – section 177 CA 06: duty to declare interest in proposed transaction or arrangement

Where a director has either a direct or indirect interest in any proposed transaction or arrangement with the company he must declare the nature and the extent of that interest to his fellow directors. It is not sufficient to disclose the interest to the shareholders. The interest must be disclosed to the other directors.

It should be noted that this means that the director only has to declare his interest before the transaction is entered into, and this may not necessarily be the first time the matter is discussed – it is possible for the company Articles to contain strict provisions on when a director should declare their interest. The de minimis rule applies here so that if a transaction is not likely to lead to a conflict of interest the director need not disclose their interest. Nor would there be any need to disclose the interest if the other directors are already aware, or ought reasonably to be aware, of the director’s interest.

The Model Articles for both private and public companies indicate that in most situations the interested director is not entitled to participate in any vote, but this can prohibition can be removed by an ordinary resolution, and the prohibition on voting will also not apply to guarantees given by or for the benefit of directors in respect of an obligation incurred by the company, nor will it apply to benefits for directors and employees, where there are no special benefits for directors.

Under section 182 CA 06 this duty is extended to existing transactions and arrangements.

It is important to note however that both in relation to sections 177 & 182 CA 2006 it is directors’ authority that is required, not the shareholders’ authority, although this is obviously subject to the rules contained within Chapter 4 CA 2006, pertaining to matters such a loans, substantial transactions etc.

There has also been additional developments of a director’s standard of care through other statutory provisions. Directors must also be mindful of developments in the area of criminal law and corporate responsibility – for example the Corporate Manslaughter and Corporate Homicide Act 2007, which can result in companies being found guilty of corporate manslaughter (corporate homicide in Scotland) due to serious management failures resulting in gross breaches of the relevant duty of care.

The 2007 Act determines the “relevant duty of care” as being a duty owed to the company’s employees or to other persons working for the company or performing services for it; it also includes a duty owed as an occupier of premises;

Directors are the human face of the company they represent. We have now moved to a situation through both judicial interpretation and statutory intervention that certain minimum standards are expected of all directors irrespective of their own particular function. Directors nowadays require to take both a long and short-term view of the company’s prospects and they must balance the interests of shareholders with other stakeholder groups.

Development of this duty has emphasised the role that directors are required to play, especially the role of the non-executive director who may not have a detailed and explicit service contract setting out specifically their exact role in the management scheme. There is a need to balance their legal duty of skill and care with market expectations for the business. In this respect their monitoring function means they have an important role to play.

The law in this area is continually evolving to meet the changes in public attitudes and is now moving apace due partly to the corporate collapses at Worldcom and Enron, which although they related to the American market, affected the UK economy, as part of the global economy. Today if a director failed to participate in a company’s affairs he would be running the risk of being found liable for breach of his codified duties.

In the USA the business judgement rule protects directors from the consequences of wrong decisions. In the UK, companies in general cannot exempt directors from their codified duties of skill and care. However insurance cover can be acquired and is permitted by legislation – section 233 CA 06. If the standard expected becomes too high this might mean directors becoming risk-averse or those best qualified to be non-executives might decline the offer for fear of litigation and liability. Increases in claims will inevitably lead to higher premiums.

              Duty to the Company and no-one else?

Directors are required by law to have regard to the interests of the company’s employees in general as well as to the interests of the company – section 172 CA 2006. This section permits directors to have regard to the interest of employees in the performance of their functions as well as the interests of the company and other stakeholders. This duty is however owed not to the employees directly but to the company and is only enforceable by the company.

The one exception in taking account of the interests of the employees where this is not necessarily in the best interests of the company is where the company is in the process of being wound up, or sold. In these situations the directors can make provision for the company employees.

Directors do not owe any duty of care to the company’s creditors, except when the company is in an insolvent position, or the directors ought to have known that the company was insolvent. The rationale behind this is that it for the creditor to ascertain whether or not the company is being run badly. It is always open to a creditor to either not deal with the company, or seek personal guarantees from the directors.

              Breach of duty by a director

What if a director breaches a duty of care, or skill etc to the company? Is there any remedy available? If a director has not participated in an act, has had no knowledge of it, and there was nothing to arouse his suspicions, then he will not be held liable for any loss.

If this is not the case then the company can seek to ratify the breach thorough approving the act by means of an ordinary resolution. – section 239 CA 06. This would be acceptable except where the vote of the director concerned, or of those connected to him, would result in the resolution being passed. There is an exception here to allow the director’s vote to be counted where there is a unanimous vote in favour of the director – remember the company could be a single member company!

It is not possible however to ratify a matter that is not permitted by an ordinary resolution, namely a fraud on the company, or a matter requiring a special resolution.

Directors cannot avoid liability to the company for their actions under the company’s constitution, or any other provision – section 232 CA 06 – but it is open to the company to provide an indemnity to the director in terms of section 233 CA 06, under which the company can meet the costs of a premium for an annual insurance policy taken out to meet legal expenses incurred by a director in successfully defending criminal or civil proceedings raised against the director as a result of his conduct as a director of the company.. It is open to a company to pay for these legal costs up front, but if the director were unsuccessful in defending the proceedings against him, he would be required to reimburse the company.

It should be noted that a company’s Articles cannot be amended to provide a director with an assurance that they will not be held liable for any breaches of duty that may occur at some point in the future.

 

If the director has not been able to secure shareholder approval for a breach of duty and the matter does end up in court it is open to a director ask the court to absolve them from liability for the breach on the basis that they acted honestly and reasonably.

 

TADAAAAAAAAAA

 

I’ve left this kinda general, I don’t want to go casting too many aspertions but I am sure that those of general intellect will see where I am going with this.

I have just heard from Clyde 1 that some more interesting revelations will come out this week about Rangers finances. I look forward to reading about this.

The whole situation just seems to go ON and On and ON and ON and ON to quote a famous T.V comedy, and that is rather aptly used because the current charade of public fighting between old and new Is turning into a comedy show that Rangers football club can ill afford. Like the crazy family on the block that everyone knows is a bit mental and decide to embarrass themselves by airing their dirty laundry in public.

I leave you with this: Do the ex- directors have a bit of a Cheek slagging Craig Whyte?

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2 Comments on “Speaking too Soon?? The ‘Old – Guard’”

  1. Michael Says:

    Yes they do. The Ancien Régime want Whyte to pull the plug before the result of the FTT(T) is published so that they don’t get the blame. Whyte wants to hold out for the FTT(T) so he can blame Murray et al. The problem is no-one knows when the findings will be published. The Ancien Régime would like it to drag out as long as possible but their recent utterances suggest they are about to be found out and the Rangers fans will really know where the blame lies.


  2. I would say that the tribunal will settle in the next 28 days. That is all 🙂


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