Disputes involving company directors are among the most commercially sensitive and legally complex forms of corporate litigation in Jersey. Claims for breach of directors’ duties, shareholder disputes and unfair prejudice petitions frequently place both personal liability and the future of the company at risk.
Directors’ duties under Jersey company law
Directors of Jersey companies owe statutory and fiduciary duties under the Companies (Jersey) Law 1991 and the general law. The principal duties include a duty to act honestly and in good faith in the best interests of the company, a duty to exercise powers for a proper purpose, a duty to exercise reasonable care, skill and diligence, and a duty to avoid conflicts of interest and unauthorised profits.
These duties are owed to the company, not directly to shareholders. However, breaches of directors’ duties often give rise to shareholder remedies, particularly where the conduct unfairly prejudices minority shareholders.
How director disputes typically arise
A common pattern in Jersey director disputes involves a company with multiple shareholders represented at board level. Over time, majority directors begin approving transactions with connected entities, fail to disclose conflicts of interest, or exclude a minority director from key decisions. The minority shareholder alleges breach of fiduciary duty, misuse of company assets and unfair prejudice. The majority directors deny wrongdoing, relying on board discretion and commercial judgment.
More broadly, director disputes in Jersey tend to fall into several categories. Conflicts of interest and self-dealing, which includes failure to disclose interests, approval of connected-party transactions, or diversion of corporate opportunities. Breach of duty and mismanagement, such as approving imprudent strategies, failing to supervise the company properly, or allowing losses to occur through neglect. Unfair prejudice and minority oppression, including excluding minority directors from board meetings, manipulating dividends, or diluting shareholdings. And deadlock, where equal shareholders or directors become unable to cooperate, paralysing the company’s decision-making.
In my experience, personal relationships and financial stakes cause these disputes to escalate quickly into formal litigation.
Claims and remedies
Where breaches of directors’ duties are alleged, Jersey law provides a range of remedies.
The company itself may bring proceedings for breach of duty, seeking damages, restitution or injunctive relief. Such claims often arise following changes in control or insolvency.
Shareholders may bring unfair prejudice petitions, applying to the Royal Court where the company’s affairs are conducted in a manner unfairly prejudicial to their interests. Remedies commonly include buy-out orders, regulation of the company’s affairs, or reversal of transactions.
In limited circumstances, shareholders may bring derivative claims on behalf of the company where those in control refuse to act.
Directors may also be removed under the articles or statute and, in serious cases, face regulatory or disqualification proceedings.
The Royal Court has wide discretionary powers and generally adopts a commercially pragmatic approach to resolving these disputes.
Risk management and prevention
Effective corporate governance remains the best protection against director disputes and breach of duty claims. This means maintaining proper board procedures and accurate minutes, disclosing conflicts of interest promptly and fully, ensuring connected-party transactions are properly authorised, and using shareholders’ agreements to manage deadlock and exit rights.
Minority shareholders, in particular, should negotiate strong information rights and exit protections at the outset, before disputes arise rather than after.
Directors’ duties in Jersey are taken seriously and actively enforced. Breaches lead to complex shareholder litigation, unfair prejudice claims and personal liability. In a jurisdiction built on high governance standards, compliance with directors’ duties is not optional.
Alexander English is the partner in charge of Parslows LLP litigation and dispute resolution department, with experience across a broad range of commercial and civil litigation matters.