Therefore, its directors are similar controlled. Thus, Section 171 of the Company Act 2006 provides that: "A director of a company must a) act in accordance with company's constitution and b) only exercise powers for the purposes for which they are conferred."
In Section 171 (a) obliges a company's directors to follow all the directions as to how the company's affairs should be composed and regulated that are situated down in the company's constitution and to obey with any constrains set down in the constitution on what activities a company may legitimately participate in. Moreover, in s.171 (b) sets out the long-standing common law rule that powers of directors ought to utilize just for the purposes for which they were presented and this also known as 'proper purposes doctrine'. The courts has developed the doctrine to make sure that directors, as agents of their companies with broad powers to deal with their affairs, apply those powers in ways that the company as principal would wish, and for no other, inappropriate purposes which are inconsistent with the interest of the …show more content…
This is a core principle of value. A conflict between a director's fiduciary duties and his personal interests is considered as the conflict of interest in this section. There are two outcomes in equity of the fiduciary must avoid conflicts of interests. First, the fiduciary will be obliged to account for any unapproved benefit gained as a result of a conflict of interest. Also, the fiduciary must not just avoid taking benefits from a conflict but must also prevent any probability that there has been a conflict of