UK Supreme Court rules that a covert director breached their good-faith duty to their company in a significant corporate governance decision
The UK Supreme Court has ruled that a director who covertly pursued his own strategy for the company while concealing it from, and misleading, his fellow directors breached the duty of good faith owed to the company. The decision, reported by Law360, is a notable development in the law on directors' good-faith duties, confirming that the duty governs how a director actually conducts themselves, not only whether they genuinely believe they are acting in the company's interests. The ruling directly engages the framework of directors' duties under English company law, which imposes a duty to act in the way the director considers, in good faith, most likely to promote the success of the company. The case confirms that a director cannot 'go it alone' by covertly pursuing an alternative course while withholding information from the board, even where they sincerely believe their approach best promotes the company's success. The case is Saxon Woods Investments Ltd and others v Costa [2026] UKSC 21, concerning Francesco Costa, former chairman of Spring Media Investments Limited, who was found to have obstructed the company's 2019 sale process in the belief a delayed sale would generate greater shareholder value. Costa was represented by Jonathan Crow KC and Lara Hassell-Hart of 4 Stone Buildings, instructed by DLA Piper; Saxon Woods was represented by Edward Davies KC and Jack Rivett of Erskine Chambers, instructed by Stephenson Harwood. The decision is nonetheless commercially significant because it raises the bar for how directors must behave towards their own boards: a director who sidelines colleagues and pursues a concealed agenda is exposed to breach of the good-faith duty even if they believed they were acting in the company's long-term interests.
Why this matters
This Supreme Court ruling has immediate relevance for banking and finance practitioners advising lenders on borrower governance, and for private equity sponsors whose appointees sit on portfolio company boards. The decision tightens the risk perimeter for any director who pursues a personal strategy behind the board's back: a genuine belief that they are acting in the company's best interests will not save them if they conceal their conduct from, or mislead, their fellow directors. For lenders, the ruling also matters in enforcement scenarios, because it clarifies who can be held responsible for decisions that damage company value in the period before a default. The 'why now' context is a broader judicial focus on accountability in corporate governance following a series of high-profile insolvencies.
On the Ground
On a banking transaction involving a borrower with a complex ownership structure, a trainee would review board minutes and corporate authority documents to confirm that individuals signing facility agreements and drawdown notices have the appropriate authority, and flag any indications that a non-director is exercising de facto control. Updating the CP (conditions precedent) checklist to include a directors' duties sign-off from counsel would be a typical task.
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