In Hawkes v Cuddy, re Neath Rugby Ltd the Court of Appeal dealt with the position of a nominee director (i.e. a director appointed by one particular shareholder) who had a potential conflict of interest between their duty to their the nominator and their duty to the company. The Court of Appeal upheld the decision at first instance and held that the nominee could take account of the interests of their nominator provided this did not breach the duties they owed to the company.
The Court held that “the fact that a director of a company has been nominated to that office by a shareholder does not, of itself, impose any duty on the director owed to his nominator”. In the Court's view, any such duty does not arise out of the nomination but may arise out of a separate agreement or employment relationship between the nominee and nominator. Furthermore any duty owed to the nominee did not detract from directors’ duties that are owed to the company.
However the Court commented that an appointed director “without being in breach of his duties to the company, may take the interests of his nominator into account, provided that his decisions as a director are in what he genuinely considers to be the best interests of the company”.
This case is relevant in a pensions context because when determining the duties of trustees or trustee directors that have been appointed by a sponsoring employer, the case law in relation to nominee directors may be relevant.