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The Supreme Court has set a new standard for ‘good faith’, & businesses will need to adjust their approach to meet it, writes Louise Wilson
- In Saxon Woods Investments Ltd and others v Costa, the Supreme Court held that directors’ duty of good faith requires honest conduct as well as a genuine belief that they are acting in the company’s best interests.
While the courts have traditionally been reluctant to interfere with directors’ commercial decision-making, the Supreme Court’s decision in Saxon Woods Investments Ltd and others v Costa [2026] UKSC 21 has made clear that directors will be subject to a narrower test of ‘good faith’.
Even if the courts remain reluctant to interfere with directors’ decision-making, they will not extend that same grace to dishonest conduct in the course of a director’s actions.
Case background
The dispute at the centre of Saxon Woods Investments v Costa arose from a shareholders’ agreement concerning the proposed sale of a company, where parties agreed to achieve a sale
