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
The US Supreme Court has invalidated federal aggregate limits on individual political contributions in the case McCutcheon et al v Federal Election Commission.
Law à la Mode — April 2014: fashion flair transforms wearable technologies; delivering IT services in the retail sector; and more
DLA Piper has released the April 2014 issue of its Law à la Mode publication.
Analysis from The Lawyer
A new breed of lawyer is smoothing the path for companies entering emerging or unstable jurisdictions
The fragile refinance market is back in rude health and US-style alternative lenders are stepping up with innovative structures to sustain the recovery