Enforcement

Abstract

This chapter studies the rules governing the enforcement of the duties imposed on directors, distinguishing between private and public enforcement. Directors owe their duties to the company and so the company is responsible for enforcing these duties. The law prefers such litigation decisions to be taken by the company through its normal process. The courts only interfere if that process cannot be made to work independently of the wrong-doers. It is unlikely for a derivative claim to succeed against the wishes of an independent majority and so it is right to observe that the shareholders are the main focus of the law. But here too the law is more nuanced and integrates the interests of minority shareholders and creditors. The duties of the directors are also enforced through the means of public law. The chapter then shows that public law sanctions particularly attach in relation to duties that enhance the interest of third parties interacting with the company. This leads to the conclusion that these interests are at least formally better protected than those of the shareholders.