General directors’ duties are set out in sections 170 to 181 of the Act, including in section 172, a new duty to promote the success of the company. This duty is developed from one of the heads of the overriding principles of the fiduciary duties, i.e., duty of good faith to act in the company’s best interest.

The Act states that the duty of directors is to act in a way which they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and that, in doing so, they will need to have regard where appropriate to long term factors, the interests of other stakeholders and the community, and the company’s reputation.
Among other things, this duty introduces wider corporate social responsibility into a director’s decision making process. ‘Success’ is not defined in the Act, although the DTI’s guidance to it suggests that for commercial trading entities “long-term increases in value” are a useful guide.
However this new duty will create difficulties for directors’. For example; making good environmental decisions may not be consistent with shareholder interests. As good practice it is vital that directors are mindful of the new duty when key business decisions are being taken and appropriate minutes recorded.