Welcome!

To all those reading this I am David Gibbs; I am a Lecturer in Company and Commercial Law at the University of Hertfordshire.

I created this blog as a general out-let of ideas for my research, as well as keeping those interested up-to-date on my research and general interests.

I completed my PhD thesis at the University of East Anglia in 2014. The thesis was recommended for the award of PhD with no corrections. My external examiner was Prof. Simon Deakin (Cambridge) and internal examiner was Prof. Morten Hviid.
My PhD research centred on directors' duties and company law. The thesis was titled 'Non-Executive Self-Interest: Fiduciary Duties and Corporate Governance'. It was a doctrinal and empirical study on whether self-interest was suitably controlled amongst non-executive directors.

My supervisors were Prof. Mathias Siems, Prof. Duncan Sheehan, Dr. Sara Connolly and Dr. Rob Heywood

All opinions of any existing or future blogpost are my own. They do not necessarily represent the views of any of my associated institutions.


Wednesday, 22 July 2015

New Publication

My recent article has now been published in the Company Lawyer. The full reference is:

D Gibbs, 'The absolute limit of directors' fiduciary liability for conflicts of interest: the director's perspective' (2015) 36(8) Company Lawyer 231-244

More to follow...

Monday, 8 June 2015

Corporate Governance: Theory, Reality, Policy

Thanks to the generous funding of the Social Science Arts and Humanities Research Institute (SSAHRI), in collaboration with Hertfordshire Business School, myself and Dr David Gindis have co-organised a workshop on Corporate Governance: Theory, Reality, Policy, which can be signed up for here

Details of speakers and the events can be seen in the programme image below.


Friday, 1 May 2015

Frequencies on Derivative Claims

Having drawn out most of the raw data for the variables I have identified on derivative claims I thought I would publish a few frequency tables from them.

Table A shows claims dismissed for a mandatory bar

Mandatory Bar

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
11
73.3
73.3
73.3
Yes
4
26.7
26.7
100.0
Total
15
100.0
100.0


Table B shows claims permitted and refused

Permission

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No
9
60.0
60.0
60.0
Yes
6
40.0
40.0
100.0
Total
15
100.0
100.0

Table D shows frequencies for the strength of those cases

Strength of case

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
No reasons for
6
40.0
40.0
40.0
More reasons against than for
2
13.3
13.3
53.3
Equal reasons for and against
1
6.7
6.7
60.0
More reasons for than against
1
6.7
6.7
66.7
No reasons against
5
33.3
33.3
100.0
Total
15
100.0
100.0

Table E shows 4 separate categories of the court's deliberation on granting or denying permission. The table represents cases where the case was either: 1) Permission granted with no reasons to dismiss; 2) Permission refused with reasons for permission; 3) Permission granted with reasons to dismiss; 4) Permission refused with no reason for permission. This is determined by whether the court felt a particular consideration under the Companies Act 2006 section 263(3) or other factor was in favour or against the claimant.


Permission Reason Values

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Granted No Against
5
33.3
33.3
33.3
Refused Against
3
20.0
20.0
53.3
Granted Against
1
6.7
6.7
60.0
Refused No Against
6
40.0
40.0
100.0
Total
15
100.0
100.0

Wednesday, 15 April 2015

Derivative Claims: Where are we Part IV

A short update to the information earlier posted on derivative claims after the decision in Cullen Investments Ltd v Brown [2015] EWHC 473 earlier this year. A full judgment is not yet available. When it is the tables can be updated accordingly.

One interesting aspect to note from Cullen Investments is the consideration of the mandatory bars. The judge adopted a flexible approach to the statutory procedure, which has been seen previously by ignoring the ex parte application. Here the judge was faced with claims by the defendant that the claim should be barred as no director, acting in accordance with s.172 would continue the claim, and that the conduct had been authorised.

The judge did not consider exactly whether the conduct had been authorised but seemingly combined the two bars to find that the claim should not be barred since a hypothetical director would consider that  there were 'good prospects of establishing that [the defendant] had not made full and frank disclosure necessary to release him from his duties' and that there was 'good evidence that [the defendant] had deliberately concealed his personal participation in the opportunity, and that such concealment was inconsistent with his defence that his participation was authorised'.

The flexibility may mean that the procedure is not weighed down by technicalities such as wrongdoer control and what legally amounts to authorisation on a preliminary hearing. However, the statute does not permit derogation from it. The judge is meant to consider whether the conduct had or had not been authorised and if so bar it. It is not a balance of probabilities on whether a hypothetical director would consider there to be enough evidence consider the authorisation invalid.


Case
Type of company
Costs indemnity sought
Financial State of the company
Shareholding % (respondent/claimant)
Amount Claimed for*
Concerned a conflict of interest?
Length of proceedings
Bamford
Ltd
Yes
Solvent
50/50
£3,500,000
No
1 day
Cinematic Finance
Ltd
No
Doubtful solvency
0/100

N/A
Yes
N/A
Cullen Investments
Ltd
No
N/A
N/A
“Scant evidence”
Yes
N/A
Fanmailuk
Ltd
N/A
Solvent
Majority/minority
£70,000,000
Yes
N/A
Franbar
Ltd
No
Solvent
75/25
N/A
Yes
2 days
Hughes
Ltd
Yes
To be dissolved
50/50
£100,000+
Yes
1 day
Iesini
Ltd
Yes
Doubtful solvency
Majority/minority
N/A
Yes
4 days
Kleanthous
Ltd
Yes
Solvent
84.5/15.5
£120,000,000
Yes
4 days
Kiani
Ltd
Yes
Solvent
50/50
£296,000
Yes
1 day
Mission Capital
Plc
Yes
Solvent
N/A
N/A
Yes
N/A
Parry
Ltd
N/A
No assets
50/50
£248,577.24
Yes
1 day
Phillips
Ltd
No
Solvent
50/50
£454,000
Yes
N/A
Seven Holdings
Ltd
No
Effectively no assets
50/50
£1,693,212.32
No
1 day
Singh
Ltd
Yes
Solvent/not trading
50/50
£873,000
Yes
1 day
Stainer
Ltd
Yes
Solvent
87/0.08
£7,000,000
Yes
1 day
Stimpson
Ltd by guarantee
No
No assets
Majority/minority
£5,300,000
Yes
4 days
* table updated 1st May 2015 and 9th June 2015



Case Name
Dismissed For/Allowed
Significant Circumstances Considered
Bamford
Dismissed at court’s discretion
Wrongdoer control
Cinematic Finance
Dismissed at court’s discretion
Majority bringing derivative claim; wrongdoer control; side-stepping insolvency rules
Cullen Investments
Permission granted
Hypothetical director would question if full and frank disclosure was given for authorisation; and case was simple on this premise; significant sum could be recovered based on lack of evidence to contrary; no basis for lacking good faith; hypothetical director would attach considerable importance; claim being funded by C so no financial risk to company and possible benefit; claimant’s action may give rise to action in own right but this was not a decisive consideration since the defence necessitated it and as a precaution since the company was entitled to some or all of the relief
FanmailUK
Case adjourned
Case adjourned
Franbar
Dismissed at court’s discretion
Strength of legal claims; ratification; alternative remedy
Hughes
Permission granted
Strength of legal claims; ratification; alternative remedy
Iesini
Mandatory Bar
Weak legal claims
Kleanthous
Dismissed at court’s discretion
Independent review of whether litigation was beneficial; strength of legal claims; alternative remedy; and benefit would be small
Kiani
Permission granted
Failure of defendant to produce any evidence to the contrary; alternative remedy
Mission Capital
Dismissed at court’s discretion
Alternative remedy; little weight to a claim for wrongful dismissal of a director
Parry
Permission granted
Strength of legal claims; ratification; good faith; alternative remedy
Phillips
Permission granted
Alternative remedy; matter of urgency case was brought to recover sums taken from the company without good reason
Seven Holdings
Mandatory Bar
Claims did not relate to a breach of duty, care, negligence or default
Singh
Mandatory Bar
No director would continue the claim if acting in accordance with s.172; fides of the claimant in question; s.994 more appropriate
Stainer
Permission granted
Strong grounds that there had been a breach of duty; strength of legal claims; disinterested shareholders deceived in to approving the loan
Stimpson
Mandatory Bar
The impact an action would have on the interests of the employees; claim of little value compared to cost of claim; legal claims were not realistically arguable