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Are the company’s directors bound by the shareholders agreement when they make decisions?

As a director, you must run the company in accordance with the company’s articles of association and company law. The articles will set out what responsibilities and powers the directors have, how decisions are taken and so on. Your duties under company law include promoting the success of the company while treating shareholders fairly.

If you are also a shareholder who has signed a shareholders agreement, then you are separately bound by that agreement.

Problems can arise if these two sets of obligations conflict. If so, company law and the company’s articles of association will normally take precedence. If you find yourself in this sort of situation, you should take legal advice.

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