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Corporate mismanagement

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Ata Rahmani
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Traditionally, British company law on the issue of liability of corporate directors for honest mismanagement recognises a division between a breach of duty of care, which imposes liability on negligent directors, and mere mismanagement, which gives them exemption. The division intends to strike a balance between management's freedom and its accountability. However, as the division itself incurs uncertainties and the courts have been excessively unhelpful, the current balance has become relatively uncertain and, further, has been too friendly towards negligent directors, which has resulted in persistence of mismanagement in British corporations. This article seeks to review the rules of liability in this area and to examine a possible way or ways through which the current uncertainties and mismanagement can be significantly resolved.