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Part III The General Duties of Directors, 14 Duty to Exercise Reasonable Care, Skill, and Diligence

Mark Arnold

From: Company Directors: Duties, Liabilities, and Remedies (4th Edition)

Edited By: Mark Arnold KC, Simon Mortimore KC

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 17 July 2024

Approved person — Conduct of business regulation — Controlled activities — Regulated persons — Statutory duty

This chapter notes the duty to exercise reasonable care, skill, and diligence in accordance with the Companies Act 2006. Care, skills, and diligence will be exercised by a reasonably diligent person with general knowledge, skill and experience. The provision reflects and replaces the position of common law as established in the Insolvency Act. The notion of care is understood as requiring carefulness, while skill denotes ability. Meanwhile, diligence may be understood as requiring the directors to apply themselves conscientiously to the affairs of the company and, in particular, the matter at hand. The chapter clarifies that the misjudgment of directors is not necessarily negligence.

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