Directors' and officers' duties
A director of a company owes fiduciary duties to the company at common law, which are essentially to exercise care and diligence in the performance of their functions. In particular, a director must:
- Act in good faith and in the best interests of the company. ‘Good faith’ contains both subjective and objective elements, in that a director must genuinely believe that he or she is acting in the company’s best interests and must also act in a way that an honest and reasonable director would act.
- Exercise his or her powers for a proper purpose. In determining what is a proper purpose, the purpose motivating the exercise of the power must accord with the objective purpose for which the power was granted.
- Not fetter his or her own future discretion. Directors must exercise active discretions and not improperly limit their decision-making authority. This does not prevent directors from delegating powers to others, provided such a decision is made with authority and is entered in the minutes of the company. Delegation is discussed further below.
- Avoid conflicts of interest and duty. If a director must choose between favouring his or her own interests and the interests of the company, the director must usually choose the latter course. A director should attempt to avoid situations that have the appearance of a conflict of interest…
If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
DLA Piper has released the 1 September 2014 issue of its Health Alert, which focuses on judgments, legislation and reports in the health sector.
DLA Piper’s privacy experts have compiled a list of dos and don’ts for addressing privacy compliance in M&A transactions.
Analysis from The Lawyer
Shearman & Sterling is making its presence felt in the City, squaring up to magic circle firms and looking to muscle in on key relationships. Private equity house Bridgepoint is one outfit that has had its head turned by the US firm.
A new breed of lawyer is smoothing the path for companies entering emerging or unstable jurisdictions