The directors have come out as the initial victors in this boardroom battle (see previous post for details). It had emerged that in an attempt to block the sale, the shareholders George Gillett and Tom Hicks had exercised their shareholders rights by removing two of the directors. The High Court has found that this was in breach of undertakings given to RBS (who seem to have played the leading part in the court hearing) and awarded an injunction allowing the board to be reconvened to pursue the sale.
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The announcement by the board of Liverpool FC of a proposed sale of the club against the wishes of the current American owners raises some interesting issues. The sale looks like it will barely cover the club’s indebtedness and leave the shareholders little to show for their investment. What are the rights of shareholders in this situation and what are the powers of the directors?
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The position of “nominee” director is an interesting one. They are openly appointed to represent the interests of a third party (e.g. a shareholder or creditor or investor) whilst at the same time owing all the duties of an ordinary director.
The duties of a director are extensive and now codified (see article for details) and include as a key requirement the duty to promote the success of the company. To a lawyers eye, the position of nominee director is therefore fraught with potential conflict of interests and fertile ground for boardroom disputes. The recent case of Hawkes -v- Cuddy, re. Neath Rugby Limited provides some guidance for nominee directors.
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Sir Fred Goodwin is currently a one man article generator. He has become a touchstone for all that went wrong with British banking. As a spotlight is shone on his role in the failure of RBS it starts to show the likely shape of the next big boardroom disputes and shareholders disputes.
What is Sir Fred’s culpability in relation to what went wrong and what should his fellow directors have done? As people look for who to blame and who to sue there is now a real focus on the duties of the directors on the Board of RBS (and other failed companies). In particular, questions are being asked about the role of non-executive directors (NEDs) who appear to have failed to curb the excesses of the executive directors. Read more »
After taking some high powered legal and forensic accounting advice Northern Rock has apparently decided that there are insufficient grounds to proceed with a negligence action against its former directors.
Negligence claims against directors are relatively rare but are a specific form of boardroom dispute.
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Boardroom Disputes, shareholders rights | Ed Weeks | 
October 13, 2010 5:17 pm | 
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