The long awaited Sequana Supreme Court judgment[1] has provided some welcome clarity around the duties of the directors of a company in the "twilight zone" – i.e. where the company is facing financial difficulties.

A recent Supreme Court decision serves as a reminder for directors to take specialist legal advice at an early stage to avoid potential liability

Managing a company’s business and making strategic and operational decisions is increasingly the subject of considerable internal and external pressures.

Summary

The Supreme Court held that when directors know, or ought to know, that the company is insolvent or bordering on insolvency, or that an insolvent liquidation or administration is probable, they must consider the interests of creditors, balancing them against the interests of shareholders where they may conflict. The greater the company’s financial difficulties, the more the directors should prioritise the interests of creditors.

Background

Introduction

Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

The High Court has held that where companies have adopted the model articles without amendment, any sole director acting has the power to pass resolutions acting alone.

Before October 3, 2022, the rules of procedure in the Saskatchewan Court of Appeal (unlike those in most other appeal courts in Canada) imposed a stay of proceedings in most cases as soon as a Notice of Appeal was served and filed. That has now changed.

Robert Chan, instructed by Leon Lai & Co, represented D2-Leung Yung (“Leung”), the former Chief Executive Officer of Peace Mark (Holdings) Ltd, to resist the Plaintiffs’ application to amend their claim to include a plea of wilful default or wilful negligence.

El Tribunal Supremo confirma la negativa del Registrador Mercantil a inscribir la renuncia del administrador único por no atender la solicitud de presencia de un notario en la junta general en la que se nombra al nuevo administrador, realizada por un socio con posterioridad a la renuncia del administrador, pero antes de la celebración de la junta.

2 | Referencias Jurídicas CMS | Septiembre 2022

Referencias Jurídicas CMS

Post jurídicos

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The 5 (five) judge bench of the National Company Law Appellate Tribunal (“NCLAT”) has recently decided the long- standing issue of whether re-presentation of appeal constitutes a fresh filing before the NCLAT and its implication on the period of limitation. The NCLAT has held, inter alia, that ‘re-filing’ an appeal (after curing defects) beyond the prescribed 7 (seven) days period will not amount to a ‘fresh filing’ for the purposes of the limitation.

Facts