The Act provides that it is the duty of each director of a company to ensure that this Act is complied with by the company. The Act has removed the duty of the company secretary to secure compliance. The directors of a company are to have regard in the performance of their functions as a director should include the interests of the company’s employees in general, as well as the interests of its members.
The Act also provides that a director of a company shall owe the fiduciary duties to the company and the company alone. The fiduciary duties of directors are:
- act in good faith in what the director considers to be the interests of the company;
- act honestly and responsibly in relation to the conduct of the affairs of the company;
- act in accordance with the company’s constitution and exercise his or her powers only for the purposes allowed by law;
- not use the company’s property, information or opportunities for his or her own or anyone else’s benefit unless—
(i) this is expressly permitted by the company’s constitution; or
(ii) the use has been approved by a resolution of the company in general meeting; - not agree to restrict the director’s power to exercise an independent judgment unless—
(i) this is expressly permitted by the company’s constitution; or
(ii) the case concerned falls within subsection (2);
(iii) the director’s agreeing to such has been approved by a resolution of the company in general meeting - avoid any conflict between the director’s duties to the company and the director’s other (including personal) interests unless the director is released from his or her duty to the company in relation to the matter concerned, whether in accordance with provisions of the company’s constitution in that behalf or by a resolution of it in general meeting
- exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both—
(i) the knowledge and experience that may reasonably be expected of a person in the same position as the director;
(ii) the knowledge and experience which the director has; - in addition to the general duty owed to employees under section 224, have regard to the interests of its members.
Directors’ Statutory Duties
The Act contains various statutory duties that directors should comply with. Some of the most important duties are:-
- Sec 281 – Duty to Keep Adequate Accounting Records
- Sec 290-295 – Duty to Prepare Financial Statements
- Sec 305 – 313 – Disclosure of Directors’ Remuneration & Transactions in Financial Statements
- Sec 333 – Obligation to have Statutory Financial Statements Audited
- Duty to File Certain Documents with CRO (various sections & Sec 198 resolutions to be filed)
- Duty of Disclosure –
- Interest in Shares (Sec 261)
- Interest in Contracts (Sec 231)
- Duty to convene General Meetings of the Company (Sec 175)
- Duty to comply with Non-Cash Transactions Involving Directors (Sec 238)
- Duty to comply with Loans to Directors and Connected Persons (Sec 239)
- Duty of Directors of Companies in Liquidation and Directors of Insolvent Companies
- Directors required to disclose details of payments to be made in connection with the transfer of shares in a company (Sec 253)
- Duty for directors of PLC’s, large private and large CLG’s to prepare Directors’ Compliance Statements (Sec 225)
- Duty for directors of PLC’s and large private companies limited by shares to either establish an Audit Committee or explain in the annual report why such a Committee has not been established. (Sec167)
Before being appointed as a director of any company, the director should agree with the board what is expected of them as directors and that these should be documented in the constitution and or the board manual of the company.