The main duties of a director (as taken from the statutory statement of director’s duties).
A director must act within his/her powers under the company’s constitution and only exercise his/her powers for the purpose for which they were conferred (CA 2006, s171).
A director must ‘act in a way he/she considers, in good faith, would be most likely to promote the success of the company for the beneﬁt of its members as a whole’ (CA 2006, s172). This duty applies to all directors’ actions, not just those exercised at board meetings. When making decisions, directors must ensure they have regard to the likely consequences of the decision over the long term, which means they must take account of the:
A director must exercise independent judgement (CA 2006, s173). This duty largely codiﬁes the requirement in common law for directors to exercise their powers independently, without subordinating their powers to the will of others and without fettering their discretion.
A director must exercise such reasonable skill, care and diligence as would be exercised by a reasonably diligent person with:
the general knowledge, skill and experience that could reasonably be expected from a person carrying out the director’s functions; and
the director’s actual general knowledge, skill and experience (CA 2006, s174).
A director has a statutory duty to avoid any situations in which he/she has, or could have, a direct or indirect interest that conflicts, or could conflict, with the interests of the company (CA 2006, s175). This applies in particular to the exploitation of property, information or opportunity regardless of whether the company could take advantage of it. It applies to a conflict of duty, as well as a conflict of interest and includes the interests of ‘connected persons’.
A director has a statutory duty not to accept a benefit from a third party which is given because of the position held by the director or because of anything the director has done in his/her capacity as a director (CA 2006, s176). In brief, acceptance of benefits is not subject to any ‘de minimis’ limit and is only permitted where the matter is approved by the company’s members or it can reasonably be regarded that it will not give rise to a conflict of interest with the company.
A director of a company has a statutory duty to disclose any direct or indirect interest he/she has in a proposed transaction or arrangement with the company (CA 2006, s177). Furthermore, the director has a duty under CA 2006, s182 to declare any interest held, direct or indirect, in an existing transaction or arrangement.