Behind the Board’s Back: Director Breached His Duties

The High Court has ruled that an interim CEO and director breached his director duties by secretly working against a deal that the board had decided was best for the company.

The deal involved a Chinese state-backed organisation increasing its indirect stake in the business by converting debt into shares. Because the companies were involved in military and dual-use work, the transaction needed government approval under the National Security and Investment Act 2021. The board believed the deal was crucial because it would help refinance bank borrowing, reduce group debt and avoid a real risk of insolvency.

The court found that, instead of supporting the board’s plan, the director tried to undermine it behind the scenes. He lobbied MPs to oppose the deal, contacted the government’s Investment Security Unit with his own proposals, approached potential buyers without permission, and gave the company’s bank a misleading impression that funding was uncertain because of the national security process.

The judge decided that he was not acting in the companies’ best interests. Instead, he was trying to protect his own position and future employment under a new owner. Even though the court accepted that he had genuine concerns about national security that did not excuse his conduct.

In legal terms, the court said he breached his duties as a director by using his powers for the wrong purpose, failing to promote the success of the company, and putting himself in a position where his personal interests conflicted with the company’s interests. He was also found to have breached his contract by failing to act faithfully, protect the business and keep the board properly informed.

The court has not yet decided what loss was caused by his actions or how much he may have to pay. That will be dealt with at a later hearing.

Case: (1) GARDNER AEROSPACE HOLDINGS LIMITED (2) GARDNER GROUP LIMITED v Mr Antony John Upton [2026] EWHC 555 (Ch), 2026 WL 00793886