Reassessing the Crime of Non-Disclosure under Section 317 of the Companies Act 1985

Currently, section 317 of the Companies Act 1985 imposes criminal penalties on the director who fails to make prompt disclosure of his interests in transactions with the company. The desirability of criminalising such an obligation has been doubted by the Law Commissions, but staunchly defended by the Company Law Reform Steering Group. This article evaluates these divergent views by examining whether non-disclosure does in fact involve elements which justify criminality. It argues that as the obligation to disclose is principally derived from and serves the same purpose as that of the fiduciary proscription against self-dealing, and that the latter rule exacts a standard of conduct which may be breached without accompanying harm or improbity, such a rule is fundamentally unsuitable for defining the contours of criminality. Even if (as the Steering Group argued) dishonesty suffices as a ground for criminalisation, such culpable intention must be subject to actual proof, not presumed from the mere fact of breach.