If the shareholders of a business believe a director to be in breach of duty, seeking the help of an experienced legal service provider should be the next step. Here is some basic advice and guidance to inform your choice of legal expert.
A company director has a responsibility to ensure that their business is being run to the best of their ability in line with the terms of their contract. This includes looking after employees and acting in the company's best interests at all times. Failing to ensure the smooth running of a business or neglecting duty of care towards staff is classed as a breach of duty.
A claim against a director must be made by a company rather than a shareholder. A director has a duty of care towards the organisation as a whole rather than a specific individual, which prevents shareholders from pursuing a director directly in relation to any perceived loss. It is possible, however, for shareholders to bring a derivative claim against the director on behalf of the company.
If a director’s breach of duty claim is successful, the company may be able to suggest a combination of solutions to improve the existing situation. This may include claiming compensation for the damages caused by the director's negligent actions or injunctions to prevent further issues. Taking steps to dismiss a director do not fall under a breach of duty dispute, but shareholders may take steps to dismiss a director by ordinary resolution should they be found to be at fault.
Legal service providers typically charge on an hourly rate basis for director’s breach of duty disputes.
Director’s breach of duty disputes can be complicated affairs, requiring expert legal guidance. For this reason, it is important to engage a legal service provider with the relevant experience and understanding of such matters. It is also worth considering factors such as location, reputation and cost of a firm.
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Directors Breach of Duty