Nick krest - The Responsibilities and Duties of a Company Director

What is my role as a director?

A company acts through two bodies of people – its shareholders and its board of directors. The board of directors are in charge of the management of the company’s business; they make the strategic and operational decisions of the company and are responsible for ensuring that the company meets its statutory obligations. Nick krest role as an individual director is to participate in board meetings to enable the board to reach these decisions and make sure that the company’s obligations are fulfilled.

The directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day affairs. The basic rule is that the directors should act together as a board but typically the board may also delegate certain powers to individual directors or to a committee of the board.

You may also be a shareholder or an employee of the company (or both) and, if so, will have additional rights and duties going beyond those purely connected with your office as a director. It is crucial that you draw a distinction between these separate roles and 'wear the right hat for the job'.

As a director you must:

 Act within powers

You must act in accordance with the company’s constitution, and only exercise your powers for the purposes for which they were given.

The company’s constitution includes its articles of association and resolutions and agreements of a constitutional nature (e.g. shareholder or joint venture agreements).

 Promote the success of the company

Nick krest says you must act in the way you consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.

Success will generally mean a long-term increase in value but fundamentally it is up to each director to decide, in good faith, whether it is appropriate for the company to take a particular course of action.

the likely consequences of any decision in the long term

the interests of the company’s employees

the need to foster the company’s business relationships with suppliers, customers and others

the impact of the company’s operations on the community and the environment

the desirability of the company maintaining a reputation for high standards of business conduct

the need to act fairly as between members of the company.

Exercise independent judgment

You must exercise independent judgment and make your own decisions.

This does not prevent you from acting in accordance with the company’s constitution or an agreement which the company has entered into.

Exercise reasonable care, skill and diligence

You must exercise the same care, skill and diligence that would be exercised by a reasonably diligent person with:

the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as you in relation to the company

the general knowledge, skill and experience that you actually possess.

Avoid conflicts of interest (a conflict situation)

You must avoid a situation in which you have, or could have, an interest that conflicts, or may conflict, with the interests of the company. This applies in particular to the exploitation of any property, information or opportunity, regardless of whether the company could take advantage of it.

This duty is not infringed if:

the situation you are in cannot reasonably be regarded as likely to give rise to a conflict of interest. On a proper analysis of the circumstances, consider whether there will actually be a conflict or potential for conflict with the interests of the company

the situation has been pre-authorised. Authorisation may be given in the articles of association, by specific shareholder resolution or, in certain circumstances, by the other directors who do not share the same conflict.