Directors must promote the best interests of the company

This week we have seen the resignation of Uber’s founder Travis Kalanick from his post as CEO, after he was asked to step aside by its major investors.

He will however remain part of the company’s board.It comes only a week after Mr Kalanick started an “indefinite leave of absence” as the company goes about starting to make substantial changes to its working cultures following a number of controversies and the publication of damning report into Uber, which included allegations of endemic sexual harassment.

Mr Kalanick has long been the public face of the taxi-hailing app. Although he has been seen as responsible for the company’s many successes, he has faced much criticism for creating a male-dominated sexist culture within Uber and more recently for his clash with an Uber driver over falling fare rates.

Mark Watson, an Associate in the corporate team at Ashtons Legal comments that “whilst Uber is a multi-billion dollar operation, the fact that it is (or was) run predominantly by an individual wearing three separate hats within the organisation – namely, as major shareholder, board member and employee – is a predicament faced by many SMEs.

“This story reminds boards up and down the country to ensure that you have the correct checks and balances in place to be able to keep individual directors in check, even where they are major shareholders, and to ensure the board is able to quickly and appropriately deal with circumstances where an individual director’s behaviour does not promote the best interests of the company and does not reflect the views of the board as a whole.

“Directors are required to act in the best interests of the company as a whole, which includes promoting the success of the company for the benefit of its members as a whole. This includes for the benefit of its investors. A director’s behaviour that drops below this standard is going to jeopardise their position on the board, especially where investors can see their share value dropping as a result of such behaviour.”