Corporate opportunities law and the non-executive director

Abstract

This article considers the current state of the fiduciary duty to avoid conflicts of interest as it applies to non-executive directors (NEDs) of UK companies, particularly in the context of corporate opportunities discovered by them in an outside capacity. The article charts the current law through the no-conflict and no-profit rules developed by the common law, and argues that the Companies Act 2006 leaves significant real-world uncertainties for the modern nonexecutive with outside business interests. Empirical data gathered from the largest listed companies in the UK are used to show that companies do attempt to legislate for this problem, but in a way that is only partially satisfactory. Finally, the article argues that the courts can and should develop the law in a way that accords with these real-world contractual solutions and the commercial expectations of NEDs, and suggests how the courts should approach cases of this type.