Companies Act 2006, section 178

Civil consequences of breach of general duties

Part 10 A company's directors

(1)The consequences of breach (or threatened breach) of sections 171 to 177 are the same as would apply if the corresponding common law rule or equitable principle applied.

(2)The duties in those sections (with the exception of section 174 (duty to exercise reasonable care, skill and diligence)) are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors.

Read section 178 in the full Act → Definitions (2) Cases (24)

Definitions used in section 178

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
director

In the Companies Acts “director” includes any person occupying the position of director, by whatever name called.

Defined in s.250 · see it in the full Act

Cases considering section 178 (24)

Rukhadze and others v Recovery Partners GP Ltd and another

[2025] UKSC 10 · 19 March 2025

The provision makes the consequences of breaching the statutory general duties correspond to those applying under the related common-law or equitable principles. Lady Rose considered that judicial alteration of those principles would therefore create statutory uncertainty (see para [330]). The subsection confirms that the section 175(2) duty is enforceable in the same way as any other fiduciary duty owed by a director to a company. It reinforced the concern that changing common-law remedies would affect the statutory regime (see para [330]).

Asertis Limited v Dale Heathcote & Anor.

[2022] EWHC 2498 (Ch) · 10 October 2022

Confirms that the consequences and enforcement of breaches of directors’ duties under sections 171 to 177 follow the corresponding common-law or equitable rules, subject to the stated exception for section 174. (see paras [31]-[34])

Brown v Bashir & Anor

[2021] EWHC 337 (Ch) · 26 February 2021

Section 178 preserves equivalent common-law and equitable remedies. For breach of fiduciary duty, the usual remedy was equitable compensation, potentially requiring an account for accurate or fair quantification. (see paras [33], [114])

4 more judgments, and what each says about section 178, are in the case-law panel in the full Act.

Amendments and notes

2 notes from legislation.gov.uk

Modifications

  1. C230Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), regs. 1(2), 83(1) (with reg. 189)

Commencement

  1. I44S. 178 wholly in force at 1.10.2007; s. 178 not in force at Royal Assent see s. 1300; s. 178 in force at 1.10.2007 by S.I. 2007/2194, art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1) this amendment is subject to savings and/or transitional provisions, see the commentary.