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In the case of a limited company, even when they take no active role in the management of the business, the company is ultimately owned by its shareholders. This means that when the directors of a limited company are said to owe legal duties ‘to the company’, in practical terms, those duties are owed to the company’s shareholders.
In the case of a general partnership, the business is owned by the partners, although unlike a company, the partnership is not itself a separate legal entity.
Legal duties are owed under the Companies Act 2006 not only by those validly appointed as the company’s directors, but also by ‘de facto directors’ (someone who has assumed responsibility to act as a director, even though they have not been validly appointed) and, in most cases, also by ‘shadow directors’ (someone with whose instructions the directors are accustomed to act).
There is rarely a simple, one-size-fits-all answer to this question, as the directors’ and shareholders’ rights and duties will often be found in several different places, including the company’s articles of association and memorandum of association, the Companies Act 2006, any shareholders’ agreements, and/or any directors’ service agreements.
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