Beyond Good Intentions: What Saxon Woods Investments Ltd v Costa Means for Company Directors

The Supreme Court’s decision in Saxon Woods Investments Ltd v Costa [2026] UKSC 21 is a useful reminder that good intentions are not always enough. Directors may genuinely believe they are acting in the company’s best interests, but that will not excuse conduct that undermines the board or sidelines the proper decision-making process. 

The case concerned a director who disagreed with the agreed approach to a company sale. He believed that delaying the sale would produce a better outcome for shareholders. However, instead of putting that view openly to the board, he pursued his preferred strategy in a way that was found to have misled other directors and kept them away from key information.

The Supreme Court made clear that section 172 of the Companies Act 2006 is not satisfied simply because a director honestly believes their preferred course is best. Good faith also has a practical dimension. Directors must be candid with the board, respect the company’s governance arrangements and use any delegated authority for the purpose for which it was given.

The process matters

The judgment is important for boards, shareholders and advisers because it draws a clear line between legitimate disagreement and disloyal conduct. A director can challenge the board’s strategy. They can argue for a different commercial course. What they cannot do is bypass the board, conceal a conflicting plan or take matters into their own hands while still claiming to act in the company’s best interests.

In practical terms, the decision reinforces the importance of board process. Courts will generally be slow to second-guess honest commercial judgment, but they will look closely at whether the decision was reached openly, collectively and on the basis of proper information.

What should boards do in practice?

Keep decisions within the board process. Important decisions should be discussed and approved through the proper channels, whether at a board meeting or by written resolution.

Be open about disagreement. A director who disagrees with the proposed strategy should raise that concern with the board, not pursue a separate course in the background.

Use delegated authority carefully. Delegated powers should be exercised only for the purpose for which they were given, with appropriate reporting back to the board.

Record the reasoning. Board minutes should show the options considered, key risks, any advice received and why the chosen course was considered to promote the company’s success.

Manage conflicts transparently. Actual or potential conflicts should be identified early and dealt with openly, including by authorisation or independent decision-making where appropriate.

Key takeaway

Saxon Woods does not prevent directors from disagreeing with one another. Robust debate is part of good governance. The point is that disagreement must be dealt with openly and through the board. For directors, the safest position is to make sure that the decision, the reasons for it and the process behind it are all clear from the company’s records at the time.

For more information or advice on what this decision could mean for your board, please contact the experienced corporate and commercial team here. 

The content of this article is a general guide only at the date of publication. It is not comprehensive, and it does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.