The directors of a company are responsible for ensuring smooth day-to-day operations. Duties and obligations come with risks, which can lead to fines and prosecution.
The director’s roles are critical depending on the different company’s applicable circumstances. Directors must ensure that they avoid unlawful and illegal conduct. To enable directors to avoid liability, here’s a brief overview of their key duties as per the Companies Act 2015:
To act within their powers, Section 142 requires directors to act on responsibilities confirmed by the constitution of the company.
To promote the success of the company, directors are required to make decisions in good faith to promote the company’s objectives and all members as a whole.
To practice independent judgement, directors must remain impartial in the decision-making process under Section 144 of the Companies Act.
To avoid conflict of interest, under Section 146, the director shall avoid conflicting interests with the company. Under subsection 2, it requires the avoidance of conflicting decisions on any property, confidentiality of company information, a director’s position in the company, and opportunities arising in the management process.
In conclusion, policy coverage and terms are necessary for directors’ practice. Directors should ensure they understand their limitations to avoid claims of negligence, breach of duty, or professional liability. It is recommended to have the board manual reviewed regularly to ensure directors’ roles are relevant and liability free.