The powers of the directors are normally those delegated to them by the company. In practical terms the directors of a company can do anything that the company can do. The powers of the company are defined in the Memorandum of Association and contained in what is known as the Objects Clause. In addition, a company obviously cannot do anything which is illegal and the same limitation is placed upon company directors. This does not however make the company powerless in the face of directors.
Every director has a duty to act in good faith in the interests of the company.
Even though the company itself is an artificial legal personality, the duty is still owed to the company, not to the shareholders or creditors of the company, though some duties to creditors and shareholders are in fact imposed by statute. At all times directors have a duty to avoid conflicts of interest and by this is meant effectively that a director must not do anything for and on behalf of the company where his motivation and loyalites would be divided in that his own self interest, of someone connected to him, may be given equal stature to that of the company. As we will see later, in the event of such actions taking place, the director has a duty to account to the company for any profits or gains he may have made as a result of this, and in consequence thereof, the companies have certain rights against the director for acting in circumstances of such conflict of interest. The powers conferred by the Articles of Association on the directors for the purposes of managing the affairs of the company may only be used for the purposes for which they were intended. Therefore, any hidden motivation or purpose which is not in the interest of the company may lead to the allegation of abuse of powers and could lead to considerable difficulties for the director in question.