# Directors' duties under the Companies Act 2006

> **Key takeaway:** CA 2006 ss.171–177 duties to the company. s.172 success + factors; s.174 care; s.175 conflicts; s.176 third-party benefits; declarations s.177/182. Creditors near insolvency (Sequana). Remedies personal/proprietary as appropriate.

- **Jurisdiction:** England & Wales
- **Practice area:** Commercial
- **Last reviewed:** 2026-08-04
- **Interactive page:** https://kttclegal.info/library/notes/Commercial/directors-duties-companies-act
- **Keywords:** directors duties, Companies Act 2006, section 172, section 175, conflicts of interest, Sequana, fiduciary, board

## What is this about?

Part 10 of the Companies Act 2006 codifies general duties owed by directors to the company. They sit alongside equitable fiduciary concepts and wrongful/fraudulent trading exposure in insolvency. Conflicts, benefits from third parties, and s.172 stakeholder factors are frequent advice points.

## What is the core rule?

Directors must act within powers (s.171), promote the success of the company for members' benefit while having regard to listed factors (s.172), exercise independent judgment (s.173), exercise reasonable care, skill and diligence (s.174 — objective/subjective hybrid), avoid conflicts of interest (s.175), not accept benefits from third parties (s.176), and declare interests in transactions (s.177 / s.182). Duties are owed to the company; ratification and authorisation mechanisms exist within statutory limits. Breach can yield damages, account, rescission, and removal consequences.

## What are the elements or test?

1. Is the person a de jure, de facto, or shadow director for the duty in question?
2. Which statutory duty is engaged?
3. For s.172: decision process and factors considered?
4. Conflict: situational conflict authorised under s.175?
5. Declaration requirements met for proposed/existing transactions?
6. Insolvency shift: creditors' interests (s.172 evolution / common law)?

## Which authorities matter?

- **Companies Act 2006, ss.170–177, 182** — Codified general duties and declaration of interest in existing transaction or arrangement.
- **Regentcrest plc v Cohen [2001] 2 BCLC 80 (context) / modern s.172 case law** — Subjective bona fides themes feeding into success duty analysis — apply with current appellate guidance.
- **BTI 2014 LLC v Sequana SA [2022] UKSC 25, [2022] 3 WLR 709** — Supreme Court on when directors must consider creditors' interests as insolvency approaches.
- **Boardman v Phipps [1967] 2 AC 46 (equitable backdrop)** — Fiduciary no-profit/no-conflict tradition underlying parts of the code.

## How does this apply in practice?

Articles may supplement but not generally dilute mandatory duties. Listed company and FCA contexts add regulatory layers. Pair with fiduciary duties and insolvency notes.

## What are common pitfalls?

- Treating s.172 as a general stakeholder cause of action for third parties
- Informal conflicts without board authorisation where required
- Ignoring creditor interests near insolvency (Sequana)
- Missing written declarations

## When would a practitioner use this?

Board advice, conflict management, and derivative/breach claims against directors.

## Quick reference

CA 2006 ss.171–177 duties to the company. s.172 success + factors; s.174 care; s.175 conflicts; s.176 third-party benefits; declarations s.177/182. Creditors near insolvency (Sequana). Remedies personal/proprietary as appropriate.

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*Reference material from [KTTC Legal](https://kttclegal.info/), not legal advice. Work product supports instructing solicitors and barristers under their supervision. England & Wales.*