Can A Director Go It Alone To Promote Company Success?

A director is not elevated to celestial status upon appointment, crowned with the divine right to declare that their personal judgment is the company’s destiny. The Articles are not a series of optional rules that can be flicked on and off like a switch.

But what if a director really and sincerely believes in the cards they hold, that they alone see the path to the promised land and think:

“You’ll thank me later.” 

No, sir. Good intentions and conviction do not confer sovereignty. You still cannot usurp the Board.

Section 172 of the Companies Act 2006

That is the effect of what the Supreme Court said in the case of Saxon Woods Investments Ltd & Ors v Costa [2026] UKSC 21.

Its decision on Section 172 of the Companies Act 2006 is probably the clearest statement yet that directors owe more than good intentions. They owe loyalty to the company and, just as importantly, to the board’s collective decision-making. 

Where directors disagree about the future of the company, can one of them ignore everyone else and pursue his own preferred strategy in secret?

No, a director cannot quietly abandon an agreed strategy and keep their colleagues in the dark.

Francesco Costa genuinely believed delaying an exit route for shareholders would generate a better return.

It seems that instead of presenting his case to the board and trying to persuade his fellow directors, he effectively took control of the sales process himself. Information was withheld. The board was misled. The agreed exit strategy quietly became something else.

The trial judge summed up Mr Costa’s mindset:

“they wouldn’t like it now if they knew, but they will thank me in the long run.”

Good faith is about conduct, not merely belief

Section 172 requires a director to act in the way they consider, in good faith, most likely to promote the success of the company.

Mr Costa argued that if his belief was genuine, the courts could not question the methods he used to achieve it:

“…the Appellant submits) that the requirement for good faith only governs the director’s thinking, rather than his conduct. Grammatically the words “in good faith” appear to be part of the phrase “he considers in good faith”. Thus if the director genuinely believes that a certain course for the company to take is best calculated to promote its success, then the director is free to adopt (indeed, perhaps is obliged to adopt: “must act”) any course of conduct he wishes to secure that the company takes that course, regardless whether, objectively speaking, his conduct involves lies, cheating, deception, dishonesty or disloyalty, ie what any reasonably well-informed observer would regard as plain bad faith.“

The Supreme Court it seems, disagreed.

As Lord Briggs explained:

“His conduct was manifestly disloyal to the Company, and he acted in bad faith towards the Company.”

In other words, good faith governs both the director’s thinking and the way the director behaves.

A sincere belief cannot sanitise deception.

Collective responsibility still matters

The judgment repeatedly returns to a simple constitutional principle.

Companies are managed by boards of directors. 

The Court explained:

“… primary responsibility for promoting the success of the company… is reposed… upon its board.”

Where a director disagrees with colleagues, the answer is discussion, persuasion and voting.

It is not covertly steering the company in another direction while everyone else thinks a different strategy is being followed.

As the Court observed, a director must:

“bring his independent view… to the attention of his colleagues… and… must not by covert conduct pursue some other strategy.”

That is simply what loyalty looks like in corporate governance.

A recipe for chaos

Perhaps the Court’s strongest passage comes near the end of the judgment.

Rejecting the argument that good faith applies only to a director’s belief, the Court warned:

“…it would be a recipe for chaos and paralysis in corporate governance.”

Good faith goes to actions as well.

If every director could secretly pursue their own preferred strategy while claiming sincere motives, board meetings would become little more than theatrical performances. Decisions would exist only on paper while individual directors quietly pursued competing agendas.

Corporate governance would cease to be governance at all.

Why this matters

This decision significantly strengthens the practical operation of section 172.

It confirms that:

• directors owe a duty of loyalty to the company as a whole;
• genuine belief alone is not enough;
• concealment, deception and covert action may amount to bad faith even where the director honestly thinks the outcome will ultimately benefit the company;
• boards govern collectively, and individual directors cannot unilaterally rewrite agreed strategy.

Section 172 is not simply about arriving at what you believe is the right destination.

It is equally about taking the lawful and loyal route to get there. A director who abandons the board’s chosen course while assuring colleagues that everything is proceeding as agreed is not exercising independent judgment. He is conceivably undermining the system of governance that gives directors their authority in the first place.