Company Law Reform Bill

This is an area where the statutory statement of the general duties of directors will have made changes—I do not shrink from saying that they are significant changes—to the common law rules and equitable principles concerning conflicts of interest. Clause 159 permitted director authorisation of what would otherwise be impermissible conflicts of interest. Clause 161 required declarations of interest in proposed company transactions. In both those cases, the general duty no longer requires the consent of members. The common law rules or principles that refer to the failure to have had a conflict of interest approved by the members of a company under certain circumstances need to be set aside. If they are not, although the Act provided that it was all right for there to be an authorisation, it might be suggested that the director should still be capable of being impeached by reference to this common law rule or principle. However, subsection (1) goes on to say:"““This is without prejudice to any enactment, or provision of the company’s constitution, requiring such consent or approval””." Certainly, the company’s constitution can reverse the change and can insist on certain steps being taken requiring the consent of the members in certain circumstances. In that event, that provision would have to be given effect to. That is the consequence of the change of approach—and therefore a change of approach to the appropriate consequence of there not being members’ approval in particular cases because it would no longer be required.