Directors’ duties: what are they and to whom are they owed?
The Companies (Jersey) Law 1991 sets out the duties owed by a director of a company in these terms:
“A director, in exercising the director’s powers and discharging the director’s duties, shall:
- act honestly and in good faith with a view to the best interests of the company; and
- exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.”
The law seems to be clear but questions about what duties are owed by a director and to whom they are owed can be some of the most troubling for a director in his or her day-to-day business of running the company. The answers affect not only what a director must do but also how it must be done and for whom.
Acting honestly and in good faith are basic requirements for how any director, or any person, must act but the law is specific that a director must act “with a view to the best interests of the company”. Identifying what this means is more difficult. One of the fundamental characteristics of a company is that it has a legal personality of its own. From this it is easy to say what a company is not: a company is not the same as the board of directors or the shareholders or the employees or the creditors or any member of those groups (even if there is only one director or one person who owns all of the shares) and the interests of a company may overlap with but may not be the same as the interests of its directors or of its shareholders, individually or collectively, or, where it is solvent, of its creditors or employees. The problem of identifying what the company is for these purposes is usually resolved, at least for so long as it is solvent, by describing it as the collective interests of the present and future shareholders…
If you are registered and logged in to the site, click on the link below to read the rest of the Mourant Ozannes briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Mourant Ozannes
News from The Lawyer
Briefings from Mourant Ozannes
Guernsey was the first jurisdiction to introduce the concept of a protected cell company but the Companies Law has effectively modernised it.
Top tips for dealing with a JFSC on-site examination; guidance on investment business on-site examinations and an important decision of the Royal Court concerning the information a party subject to regulatory action should be provided with.