A director must act within the powers imposed upon by the relevant legislation/governing body, the company’s constitution and any specific power of attorney, if any. A director is also required to implement the decisions approved by the shareholders and act in accordance with any specific powers that may have been delegated by the shareholders or by the Board of Directors itself, if any.
As a director, you must act in a way which you think is most likely to promote the success of the company. You need to consider a number of statutory factors relating to corporate requirements, including the long term consequences of your decisions, the company’s reputation and the interests of other stakeholders such as employees, customers and the community.
Directors occupy a fiduciary position towards the company whose board they form. Directors as fiduciaries are therefore subject to the following duties:
The provision of the Act regarding directors’ duties confirms the common law duties of care, skill and diligence; which provides that a director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office for a proper purpose and in good faith in the best interest of the company.
The significance of the Act is that it imposes criminal liability where general law duties are breached. It states that a director must at all times act honestly and use reasonable diligence in the discharge of duties of his office.
However, by S.214(1) of the Act a director is relieved from any liability from making a business judgement if he:
In addition, below are some of the key duties from the Act and other legislations for consideration by a director:
indirectly) or to cause detriment to the company
The wrongdoer under Anti-corruption Act 1997 is not confined to an individual. A corporation can be prosecuted and punished.
Directors need to ensure that there are sufficient internal controls coupled with pro-active and regular education efforts concerning gifts, entertainment and corruption.
Any serious accidental injury and investigations and environmental breaches, if applicable, must be reported in accordance with the company’s policy. For example, directors are required to ensure compliance with the Occupational Safety and Health Act 1994, which requires employers to;
You must comply with all competition law and regulations as failure to do so will lead to severe penalties which could include fines and imprisonment. Examples of behaviour to be particularly cautious of include refraining from price fixing and bid rigging; if in doubt, always seek advice.
You must comply will all areas of tax law and regulations. Failure to do so could leave you liable for penalties or imprisonment, particularly for the failure to file tax returns, or for filing false tax returns.
Generally our tax advisors will attend to the computation of tax and submission of tax returns. However, it is prudent for a director to make occasional enquiries to ensure compliance of the law.
Like all of the company’s employees, you must comply with Anti-Bribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote the company’s internal policies and procedures.
Although the Code applies to public listed companies, it is useful to acquaint oneself with its main provisions as many of them expound good corporate practice.