10.10 The primary obligation and legal duty of care of directors of a JV constituted as a company is to the JV itself and not to the person of whom they are the representative or by whom they are nominated. They have an obligation to exercise independent judgement and act in good faith so as to promote the success of the JV.
10.11 As the JV is owned by its participants, promoting its success should be assessed by reference to the participants and their long term interests, but directors are also required to take into account, when considering the promotion of the success of the venture, the interests of a number of other stakeholders, such as the JV's employees, suppliers, customers, and wider interests such as the environment. Further, the directors are not permitted to favour the interests of one participant over another and must act fairly as between the members of the JV.
10.12 Where the JV is insolvent, a director must consider the interests of creditors in preference to the interests of the participants. In fact, responsibilities to creditors in relation to insolvency arise in the run-up to insolvency or potential insolvency, not just after the event. This is a complex area in its own right and should it arise in practice directors should seek specialist legal advice.
10.13 It should be noted that directors' duties of the type owed by directors of limited companies are not owed by the members of an LLP or LP and, specifically, Part 10 of the Companies Act 2006 (which contains the provisions codifying directors' duties) does not apply to LLP or LP members. However, members do owe general fiduciary duties to the LP and LLP, such as a duty to avoid conflicts and duty not to profit personally from being a member of the LLP or LP. It is normal for obligations to be imposed on the members, via the LLP/Partnership agreement, to act in the best interests of the LLP/Partnership and not to act in conflict with its interests. Whilst these duties will legally be owed directly by the members of an LLP or LP, the persons administering the LLP or LP on behalf of the public sector body will need to act in accordance with these duties.