Companies Act 2006, section 1157

Power of court to grant relief in certain cases

Part 37 Companies: supplementary provisions

(1)If in proceedings for negligence, default, breach of duty or breach of trust against—

(a)an officer of a company, or

(b)a person employed by a company as auditor (whether he is or is not an officer of the company),

it appears to the court hearing the case that the officer or person is or may be liable but that he acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly or in part, from his liability on such terms as it thinks fit.

(2)If any such officer or person has reason to apprehend that a claim will or might be made against him in respect of negligence, default, breach of duty or breach of trust—

(a)he may apply to the court for relief, and

(b)the court has the same power to relieve him as it would have had if it had been a court before which proceedings against him for negligence, default, breach of duty or breach of trust had been brought.

(3)Where a case to which subsection (1) applies is being tried by a judge with a jury, the judge, after hearing the evidence, may, if he is satisfied that the defendant (in Scotland, the defender) ought in pursuance of that subsection to be relieved either in whole or in part from the liability sought to be enforced against him, withdraw the case from the jury and forthwith direct judgment to be entered for the defendant (in Scotland, grant decree of absolvitor) on such terms as to costs (in Scotland, expenses) or otherwise as the judge may think proper.

Read section 1157 in the full Act → Definitions (3) Cases (95)

Definitions used in section 1157

officer

“officer”, in relation to a body corporate, includes a director, manager or secretary;

Defined in s.1173(1) · see it in the full Act
company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
the court

(1) Except as otherwise provided, in the Companies Acts “the court” means—

(a)in England and Wales, the High Court or the county court;

(b)in Scotland, the Court of Session or the sheriff court;

(c)in Northern Ireland, the High Court.

Defined in s.1156(1) · see it in the full Act

(2) The provisions of the Companies Acts conferring jurisdiction on “the court” as defined above have effect subject to any enactment or rule of law relating to the allocation of jurisdiction or distribution of business between courts in any part of the United Kingdom.

Defined in s.1156(2) · see it in the full Act

Cases considering section 1157 (95)

R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court and another

[2023] UKSC 38 · 1 November 2023Interprets

The provision succeeded section 727 of the Companies Act 1985. Decisions classifying administrators or liquidators as company officers for its purposes were wrongly decided (see paras [30]-[36]).

South Bank Hotel Management Company Limited v Galliard Hotels Limited & Ors

[2026] EWCA Civ 56 · 6 February 2026

Recognises the court’s power to relieve a director who acted honestly and reasonably and ought fairly to be excused, but remits the question because the necessary merits and factual findings were not determined. (see paras [35], [86]-[87], [160])

Neil Leslie Humphrey & Anor v Paul Craig Bennet & Anor

[2023] EWCA Civ 1433 · 29 November 2023Interprets

A director relying on section 1157 must plead facts capable of showing honesty, objective reasonableness and fairness. The defence may be determined summarily if inadequately pleaded, but breach of sections 175 or 177 and receipt of a benefit do not inevitably defeat relief. (see paras [79]-[91])

75 more judgments, and what each says about section 1157, are in the case-law panel in the full Act.

Explanatory note

1481.Under this section, which restates section 727 of the 1985 Act without substantive amendment, an officer of a company (such as a director) or a person employed by a company as auditor may apply to the court for relief from liability for negligence, default, breach of duty or breach of trust. A court may grant relief if it appears to the court that:

  • the director (or other officer or auditor) has acted honestly and reasonably; and

  • having regard to all the circumstances, he ought fairly to be excused.

All the explanatory notes for the Act

Amendments and notes

5 notes from legislation.gov.uk

Modifications

  1. C1778S. 1157 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 51 (as amended (1.10.2009) by The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (S.I. 2009/1804), regs. 2, 85, Sch. 3 para. 15(4)
  2. C1779S. 1157 applied (with modifications) (9.7.2009 for certain purposes otherwise 1.10.2009) by The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (S.I. 2009/1804), regs. 2(2), 77
  3. C1780S. 1157 applied (E.W.) (14.3.2012) by Charities Act 2011 (c. 25), ss. 192(1), 355 (with s. 20(2), Sch. 8)
  4. C1781S. 1157 modified (1.1.2016) by Charities Act (Northern Ireland) 2008 (c. 12), ss. 92(1), 185(1); S.R. 2015/383, art. 2(3), Sch.
  5. C1782S. 1157 applied (with modifications) (26.6.2017) by The Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (S.I. 2017/694), regs. 1(1), 76