Re Mitek Holdings

chopser

Just a bit confused regards restriction of directors in the company exam.
How exactly has the Supreme Court decision in the Mitek Holdings case clarified the previous indecisiveness in Re Tralee Beef and Lamb.

Is it correct to say that fiduciary duties are now to be taken into account in application of sec 150?
And also that all Directors regardless of how much they are involved in the day to day running of the business are to be held responsible?

FreudianSlippers

Fennelly J considered La Moselle and Re Tralee Beef & Lamb and remarked that:

“It seems to me that these passages and much of the supporting citations reflect the more relaxed standards of business in another age. [...] It is certainly of assistance to consider the scope of the duties of a director, but section 150 is not concerned with the breach of duties to the company alone. It is broader. It is always appropriate to keep in the forefront of one’s mind the terms of the applicable statutory provision. The question to be considered, in a case such as the present, where no question of honesty arises, is whether the director against whom an application for a restriction order is made “has acted responsibly in relation to the conduct of the affairs of the company.””

The decision is considered to be an "amplification" of the previous cases. It was also made clear that the duty cannot be limited to executive directors. In fact, non-executive directors must discharge this duty of being informed as well, especially “in the times we live in [...] they cannot be mere ciphers or purveyors of votes at the whim of management.”

Fennelly J wrote:

“The Act of 1990 itself evinces public concern that directorships involve real responsibility and that persons who do not conform at least to some generally acceptable minimum standards either should not, in the public interest, be permitted or should be restricted in regard to future holding of directorships.”

Essentially (and what hasn't changed in Re Mitek) each scenario is considered on a case-by-case basis, however, the duty placed on both executive and non-executive directors is much more onerous. For a non-executive director to turn around and try to defend themselves by saying they did nothing in the company, Re Mitek has the effect of then saying to that non-executive director that it isn't a valid defence. In fact, a director that does nothing is equally in breach of his or her duty as an executive director.

chopser

Thank you.