''Percival v Wright''

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UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...

case concerning

directors' duties Directors' duties are a series of statutory, common law and equitable obligations owed primarily by members of the board of directors to the corporation that employs them. It is a central part of corporate law and corporate governance. Directors ...

, holding that directors only owe duties of loyalty to the company, and not to individual shareholders. This is now codified in the United Kingdom's

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

, section 170.

Facts

Shareholders in Nixon's Navigation Co. wanted to sell their shares, and requested that the company's secretary find purchasers. Some directors of the company purchased the shares at £12.10s per share, which price was based upon independent valuation. After the sale, the shareholders discovered that before and during the negotiations for that sale, the board of directors had been involved in other negotiations to sell the entire company, which would have made those shares substantially more valuable had they come to fruition. The plaintiff sued, claiming breach of fiduciary duty, in that the shareholders should have been told of these negotiations.

Judgment

Swinfen Eady J held the directors owed duties to the company and not shareholders individually.

Significance

''Percival v Wright'' is still considered to be good law, and was followed by the

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in . However, it has been distinguished in at least two subsequent cases. In ''Coleman v Myers''

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BCLC 372 the court described this as being the general rule, but one which may be subject to exceptions where the circumstances are such that a director may owe a greater duty to an individual shareholder, such as when that shareholder is known to be relying upon the director for guidance, or where the shareholder is a vulnerable person.

Notes

{{reflist United Kingdom company case law High Court of Justice cases 1902 in case law 1902 in British law

Facts

Judgment

Significance

See also

Notes