The members of a company can ratify a director’s negligence, default, breach of duty or breach of trust by passing a resolution under section 239 of the Companies Act 2006. The director concerned, and any member connected with them, cannot help pass it: their votes in favour are ignored at a meeting, and they are not eligible members on a written resolution. Unanimous consent of all the members is still effective, and some conduct cannot be ratified at all.

What does ratification actually do?

A director’s general duties, set out in sections 171 to 177, are owed to the company, so the company is the party that can sue for a breach. Ratification is the company deciding, through its members, to adopt or excuse conduct that has already happened. Its most important legal effect is on claims: under section 263(2)(c), a court must refuse a shareholder permission to continue a derivative claim if the act or omission complained of has been ratified by the company since it occurred.

Ratification is different from authorisation given in advance. Section 180(4)(a) preserves any rule of law allowing the company to authorise something that would otherwise be a breach, and section 175(4)(b) lets the board itself authorise a conflict of interest if the conditions in section 175(5) and (6) are met. Section 239 deals with the after the event decision, and it applies whatever the source of the duty, as long as the conduct amounts to negligence, default, breach of duty or breach of trust in relation to the company. See directors’ duties under the Companies Act for the duties themselves.

Who decides, and what majority is needed?

Section 239(2) says the decision must be made by resolution of the members. The board cannot ratify its own breach by board minute. Because section 239 does not specify the type of resolution, section 281(3) applies: an ordinary resolution unless the articles require a higher majority. Under section 282 an ordinary resolution is passed by a simple majority. On a written resolution that means members holding more than half the total voting rights of the eligible members.

The section applies to conduct of a former director as well as a serving one, and a shadow director is treated as a director (section 239(5)). “Conduct” covers omissions as well as acts, so a failure to act, such as not renewing an important contract, can be ratified in the same way as a positive step.

Who is not allowed to vote?

The restrictions depend on how the resolution is proposed.

  • Written resolution: neither the director (if a member) nor any member connected with them is an eligible member (section 239(3)). The explanatory notes say the company does not need to send them a copy, and they are not counted when working out the votes needed.
  • Meeting: the resolution passes only if the necessary majority is obtained disregarding votes in favour cast by the director and connected members (section 239(4)). They may still attend, count towards the quorum and take part in the discussion.

“Connected” uses the section 252 definition: family members as defined in section 253, connected bodies corporate, and certain trustees and partners. Section 239(5)(d) switches off the usual rule that a person who is a director is not a connected person, so for ratification a fellow director who is connected with the director in breach, for example their spouse, is also excluded. The explanatory notes describe the exclusion of the interested director’s own votes as the one significant change the 2006 Act made to the earlier law.

Only votes in favour are disregarded at a meeting. A connected member who votes against is counted in the normal way.

When does the voting restriction not apply?

Section 239(6)(a) preserves the validity of a decision taken by unanimous consent of the members. The explanatory notes confirm that the restrictions on who may vote do not apply when every member votes, informally or otherwise, in favour. In a company where the director in breach is the only shareholder, or where all the shareholders are directors who agree, unanimous consent is the practical route. The decision should still be recorded in writing.

Section 239(6)(b) also leaves untouched any power the directors have to agree not to sue, or to settle or release a claim brought on the company’s behalf. That is a management decision, and it is itself subject to the directors’ duties.

What does this look like in practice?

Illustration only. Birch Ltd has three shareholders: Dana, a director, with 40% of the votes; Dana’s husband Lee, who is not a director, with 15%; and an investor, Kim, with 45%. Dana failed to exercise an option to renew a profitable supply contract before it lapsed, and the company has lost the income. Dana proposes that the members ratify the omission.

Route Who counts Result
Written resolution Dana and Lee are not eligible members, so Kim holds 100% of the eligible voting rights. Passes only if Kim agrees.
General meeting, poll Votes in favour from Dana and Lee are disregarded. Kim’s vote decides it. If Kim votes against, it fails.
Unanimous consent All three members agree. Effective under section 239(6)(a).

If the resolution fails, the company could still decide to pursue Dana, and Kim could apply to bring a derivative claim under section 260. If it passes, a later derivative claim over the same omission must be refused permission.

What cannot be ratified?

Section 239(7) says the section does not affect any other enactment or rule of law imposing additional requirements for valid ratification, or any rule of law as to acts that are incapable of being ratified. Those limits come from outside the statute, so advisers need to check the general law before relying on a resolution, particularly where the conduct involved a director taking company assets for themselves.

The financial position of the company is the biggest practical limit. Section 172(3) makes the duty to promote the success of the company subject to any rule of law requiring directors to consider or act in the interests of creditors. Insolvency Service guidance says that once a company is insolvent, directors’ priorities shift from the shareholders to the creditors. A liquidator can apply to court under section 212 of the Insolvency Act 1986 for a director to repay or compensate the company for misfeasance or breach of fiduciary or other duty. A shareholder vote taken when the company was in financial difficulty should not be treated as a reliable answer to that kind of claim; see wrongful trading and director liability.

How is ratification different from other protections?

  • Exemption clauses: section 232 makes void any provision, whether in the articles or a contract, that tries to exempt a director in advance from liability for negligence, default, breach of duty or breach of trust. Ratification is a decision about specific past conduct, not a blanket exemption.
  • Relief from the court: under section 1157 a court may relieve a director wholly or partly if they acted honestly and reasonably and ought fairly to be excused. A director can apply before any claim is made.
  • Insurance: section 233 allows the company to buy insurance for its directors against these liabilities.
  • Loans and other transactions needing approval: a loan made without the approval required by section 197 is dealt with by affirmation under section 214; see loans to directors and member approval.

What are the common mistakes?

  • Recording ratification in board minutes rather than passing a members’ resolution.
  • Counting the votes of the director’s spouse, parents or family company.
  • Overlooking that a fellow director who is the spouse of the director in breach is excluded too.
  • Describing the conduct vaguely, so it is unclear later what was ratified.
  • Using ratification to tidy up transactions when the company is already struggling to pay its creditors.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.