Re Barings plc (No 5)

Facts

A trader's unauthorised dealings caused losses that brought down Barings Bank. The Secretary of State sought to disqualify senior managers who had failed to supervise him.

Issue

Were the managers unfit to be directors because of incompetence?

Held

Yes. Directors have a continuing duty to acquire and keep sufficient knowledge of the business to discharge their duties, and their serious failure to supervise made them unfit.

Principle

Serious incompetence, without dishonesty, can show unfitness, and directors must supervise those to whom they delegate.

Why it matters

It is persuasive on the standard of care and on delegation.

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