To all those reading this I am David Gibbs; I am a Lecturer in Law at the University of East Anglia.

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.
ORCID 0000-0002-6596-8536

Tuesday, 28 December 2010

Decrease in Disqualified Directors

The Times have reported today an increase in reports to the Insolvency Service about directors from 3539 in 2002 to 7030 in 2009. The number of directors disqualified has decreased from 1594 to 1387.

The Insolvency Service budget has fallen as well from £9305 to £4097 per case since 2002. According to The Times the lack of resources means that investigators will only take cases that are considered to be "low hanging fruit" leaving the more serious violations unpunished.

From a breach of duty point of view it may provide further evidence that although the ways in which directors may be subject to liability the likelihood of that ever being a worry for a director is minimal. More practical ways in ensuring directors are not acting in breach of duty or not fulfilling their non-fiduciary duties are needed. Merely making directors more liable will not prevent those with an intent to breach duties regardless of any ethical codes of conduct. Accidental breach their duties will continue to occur for reasoning of generality of the codified statement or misinterpretation of it.

What more practical ways may work is unclear. An early thought may be something similar to compliance programs that you see as a method to prevent breaches of competition law. Further research would be needed for more recommendations however.

Thursday, 23 December 2010

Preliminary thoughts on BIS Companies Act 2006 Review

The Department of Business Innovation and Skill have published a two part review on the impact of the Companies Act 2006 (Vol 1 available here and Vol 2 here).

Here are some of my preliminary thoughts on the sections relatings to my work, namely derivative claims and conflicts of interest.

It is hard to come to terms with the notion that the law relating to conflicts of interest is clearer.

I agree that it is simplified and understandable for directors and may narrow or reduce those people in conflict, but it does not change what constitutes conflicting behaviour which was unclear before 2006. So, if you find yourself in court for conflict of interest the generality of the statutory statement may be of little assistance to a director. A restatement of the law which the Companies Act supposedly does will not rectify to problems relating to conflicts.

Furthermore directors and shareholders can interpret a general statement differently and may overlook a blatant conflict of interest whilst at the same time try and claim a breach of duty for a conflict when it clearly is
not. The biggest issue may be the interpretation of s175(4) that there will not be a conflict where it is not reasonably likely to give rise to a conflict

The part on derivative claims was a bit empty as well as assessing the CA 2006 effectiveness of the claim. It mentions people are aware they can bring a claim for a breach of duty but in reality case law is demonstrating it is all a bit of a false dawn for minority shareholders.

I for one am starting to believe the interim permission (prima facie) stage should be a significantly higher threshold as I don't see it serving as anything more than giving shareholders false hope. I portray the removal of the this stage in my forthcoming papers rather than increasing the level of the threshold but I still believe either way the stage is not serving a positive function.
These are my preliminary assessments and my last actions on my research for the year! Clocking off at 19:39 23rd Dec 2010. A Merry Christmas and a Happy New Year to all those reading this.

Saturday, 11 December 2010

Duty-Duty Conflicts

How important are duty-duty conflicts in a fiduciary relationship between company and director? This is what I am now aiming to find out. With more firms becoming inter-connected it is foreseeable, or even true, that directors are serving on more than one board that possibly may conflict with one another.

Much has been written about duty-interest conflicts but very little by way of duty-duty conflicts, although both topics will form part of my thesis.

After assessing how duty-interest conflicts are regulated, which also appears inconsistent in itself, it is appears that such regulation would not cover substantially duty-duty conflicts for directors.

Dr. Matthew Conaglen has written substantially on the topic however, my work is in reference to the fiduciary relationship between director-company which has fundamental differences from that of other fiduciary relationships.

S.175(7) of the Companies Act 2006 does try to address duty-duty conflicts:

(7) Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties

The section clearly treats duty-duty conflicts as something "additional" to duty-interest conflicts rather than its own separate principle.

Notably in the parliamentary debates in the Grand Committee a lot of the discussion focused on directors serving on more than one board when referring to s175, which is clearly a duty-duty conflict, however they were talking about it in reference to s175 and duty-interest conflicts. This perhaps demonstrates the vagueness of the principle or a reluctance to allow it to be its own principle.

Few cases have made reference to the duty-duty conflicts. Most read so far, i.e. the case of Mothew, usually refer to where the fiduciary's two principals are contracting with one another in some way. None seem to make reference to  a case regarding opportunities coming to a director that could be taken by either principal. Directors are restricted by the "double management" rule (meaning they cannot serve on competing boards) but with the interconnected firms growing, e.g. Steve Jobs serving on Apple's board and Disney's board, the duty-duty conflict may become more relative in years to come.