Main Duties of the Directors of the company

Today I’m going to talk about the duties of the directors of the company.

The law has set some of the duties to be carried out by the directors

Duties of directors are usually considered under the following broad terms namely;

  1. Duty of care and skill
  2. Duty to act in good faith and the best interest of the Company
  3. Duty to disclose an interest

directors Duty of care and skills

The company law requires the directors to act with due care.

They are required to exercise care, skills, and diligence, and knowledge same as a reasonable man with their experience put in their position could have used.

He is also expected to use any special knowledge or experience that any director of his type is expected to have.

But he does not owe his company a duty to take all possible care or to act with the best car. He needs not to show in his performance of his duties a greater degree of skills than may reasonably be expected from a person of his knowledge and experience.

The duty does not prevent a director from relying on the advice or work of others, but the final judgment must be his responsibility.

All times directors should know at least what is happening in a company

Ignorance is not a defense and a director may be jointly or severally liable for any mistakes made.

directors Duty to act in good faith and in the best interest of the company

Directors have a duty to act bonafide and in good faith in the interest of the Company

Powers of directors should be directed towards performing duties that are honestly believed to be for the best interests of the Company.

Directors are expected to promote the Companies’ success.

The clear meaning of the term interest of the company includes that the directors must have regard to the interest of the present and future members of the company.

They must view against the interest of the company if the act is aimed at benefiting their own desires or rather the interest of a third party instead of that of a company.

In the case of BRITISH MIDLAND TOOLS VS MIDLAND INTERNATIONAL TRADING   where the two directors were about to resign and join a director who had previously resigned and set up a rival company were found to be in breach of their duty to act bonafide for the benefit of the company.

They knew that the proposed new company was approaching the existing employees to entice them to join their rival company (it had in fact already poached twelve employees) and they did nothing to discourage the movement.

directors Duty to disclose an interest

Company law wants a director to avoid a situation in which could have a direct or indirect interest that conflicts with the interest of the co.

They should ensure that the interest of the company always prevails

They are required to have regard also to the interest of the employees of the company and not only of the members of the company

In order to act in good faith and in the best interest of the company a director should avoid personal Profits when discharging his duties and must disclose any interests whatsoever in any company transactions.

Other duties of the directors include;

directors Duty to the disclosure of age

A director has a duty to disclose his true age under S. 195 of the companies Act before he is appointed into such a post

directors Contractual Duty

A director should remember his/her contractual duties under the employment contract as both an employee and a director.

Read: Powers and liability of directors

Isack Kimaro
Isack Kimaro

Editor-in-chief and founder of Holder of Bachelor of Laws (LL.B) and Post Graduate Diploma in Legal Practice. Lawyer by profession and blogger by passion