Claire-Elaine Arthurs reviews lessons for directors from the recent case of Saxon Woods Investments Limited and others v Francesco Costa [2026] UKSC 21.
Differences of view around the board table are a normal and necessary part of good governance, and a director who takes a different view of the right commercial course is doing the job properly by saying so. On 14 July 2026 the Supreme Court considered for the first time what section 172 of the Companies Act 2006 requires of a director in that position.
The answer is as much a governance point as a legal one: the disagreement must be raised openly with the board, and once the board has reached its decision, the dissenting director must not work covertly against it. Acting on your own view while allowing colleagues to believe the agreed strategy is being followed is a breach of duty, however firmly you believe you are right.
Background
Spring Media’s shareholders’ agreement required a sale of the company by the end of 2019, and the board delegated conduct of that sale exclusively to its chairman. He considered a later sale would produce a better return. He did not put that view to the board. Instead, he delayed the process while leaving the board under the impression that the sale was on track. The pandemic then destroyed any prospect of a beneficial exit.
The Decision
The High Court found unfair prejudice but no breach of duty, because the chairman had genuinely believed he was acting in the company’s interests. The Court of Appeal disagreed, allowed the shareholder’s appeal and ordered the chairman to buy out the shareholder personally at the undiscounted 2019 value. The Supreme Court unanimously dismissed the further appeal and upheld that order.
Section 172 governs a director’s conduct as well as their intentions, and that conduct is assessed objectively. A genuine belief is no answer to disloyal behaviour. Section 171 was breached as well: the board had delegated the sale process to the chairman for the purpose of achieving the agreed exit and using that authority to pursue a different strategy was a use of the power for a purpose other than that for which it was conferred. The Court also confirmed that a claimant need not establish dishonesty, so conduct falling short of it may still found a claim.
Practical points for directors
- Raise disagreement at the board, openly and at the time, and ensure it is minuted. Concealment is the risk, not dissent.
- Record your reasoning, the alternative you would prefer and the consequences you anticipate if the board proceeds regardless. Vote against if necessary. That record is what makes your position defensible when it is examined later.
- Once the board has resolved on a course, do not work against it covertly. You may continue to press your view openly and you may resign, but you may not implement your own strategy in its place.
- If you cannot support the decision and are concerned about your own position, take independent legal advice on your duties and your options.
- Where the board delegates a task to you, carry it out on the terms on which it was given. The authority exists for that purpose alone, and using it for anything else exposes you personally, as the buyout order made against the chairman in this case demonstrates.
Most directors will never behave as the chairman did here. The value of the judgment for the rest is that it settles what good governance looks like when a board is genuinely divided.
A director who argues the point, has the dissent recorded and then implements the decision taken is protected by that conduct. A director who goes quiet and proceeds regardless is not, and the cost of getting that wrong falls on them personally rather than on the company.
