Chwilio Deddfwriaeth

Companies Act 2006

Section 174: Duty to exercise reasonable care, skill and diligence

336.This duty codifies the director’s duty to exercise reasonable, care, skill and diligence. Traditionally, the courts did not require directors to exhibit a greater degree of skill than may reasonably be expected from a person with their knowledge and experience (a subjective test). More recently, the courts have said that the common law standard now mirrors the tests laid down in section 214 of the Insolvency Act 1986, which includes an objective assessment of a director’s conduct. This section is modelled on that section.

337.The section provides that a director owes a duty to his company to exercise the same standard of care, skill and diligence that would be exercised by a reasonably diligent person with:


the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as the director in relation to that company (an objective test); and


the general knowledge, skill and experience that the director actually has (a subjective test).

Yn ôl i’r brig


Print Options


Nodiadau Esboniadol

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.


Rhagor o Adnoddau

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • y PDF print gwreiddiol y fel deddfwyd fersiwn a ddefnyddiwyd am y copi print
  • rhestr o newidiadau a wnaed gan a/neu yn effeithio ar yr eitem hon o ddeddfwriaeth
  • manylion rhoi grym a newid cyffredinol
  • pob fformat o’r holl ddogfennau cysylltiedig
  • slipiau cywiro
  • dolenni i ddeddfwriaeth gysylltiedig ac adnoddau gwybodaeth eraill