Duties of directors - company management, Business Law and Ethics

Duties of Directors:

The duties of directors are usually considered under two broad headings, namely-

i. Duties of care and skill at common law, and

ii. Fiduciary duties as enunciated by courts of equity.

1. Duties of Care and Skill

The directors' duties of care and skill have been formulated in a series of cases brought against directors in order to make them liable in negligence for the manner in which they conducted the company's affairs. These duties were summarised by Romer, J. in RE CITY EQUITABLE FIRE INSURANCE CO LTD as follows:

i. A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience.

This rule prescribes a duty which is partly objective ( the standard of the reasonable man) and partly subjective (the reasonably man is deemed to have the knowledge and experience of the particular director). It may also be expressed by saying that, if a foolish director makes foolish decisions resulting in loss to the company, he cannot be liable for negligence. It would be unreasonable to expect a foolish director to make wise decisions. However, if the director made very foolish decisions resulting in loss to the company, he will be liable in negligence since it is not reasonable to expect a foolish director to make very foolish decisions. On the other hand, a wise director will be liable if he makes unwise decisions, since it is unreasonable to expect him, a wise man, to make unwise or foolish decisions.

Posted Date: 1/12/2013 4:51:06 AM | Location : United States







Related Discussions:- Duties of directors - company management, Assignment Help, Ask Question on Duties of directors - company management, Get Answer, Expert's Help, Duties of directors - company management Discussions

Write discussion on Duties of directors - company management
Your posts are moderated
Related Questions
Group Accounts: Section 150 requires a company which has subsidiaries to lay before the company in general meeting accounts or  statements dealing with the state of affairs an

QUESTION 1 With the coming into force of the Employment Rights Act, how far has the freedom of the employer to unilaterally terminate contracts of employment been curtailed?

Define the term - bliss point A country's bliss point is the outcome of monetary growth rates that gives that country its highest possible level of welfare. The bliss point fo

Companys debts: In case a company is unable to pay its debts the creditors, or a creditor, may petition the High Court for an order to wind it up. During the winding up the me

What are the elements in the tort of negligence? There should be two elements, in tort as: a. The breach of legal duty or injuria. b. Loss suffered through defendant damn

This activity brings together the ethical issues, concepts, and statutes presented in your readings, lectures, and discussed in your chat sessions. You will select two (2) scenario

QUESTION 1 What are the duties of an Occupational, Safety and Health officer in an organization? QUESTION 2 Section 47 (1) of the Occupational, Safety and Health Act st

QUESTION 1 (a) What are usually accepted principles of corporate governance. (b) What factors can lead to incrising corruption in the business environment? QUESTION 2

Substantive Law: Therefore this is concerned through the rules themselves as opposed to the procedure on how to affect them.  So it defines the rights and duties of parties an

QUESTION 1 Describe the various sources of law that exist QUESTION 2 Define „Statutory Interpretation? and explain the various methods that exist to interpret a statute