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Corporate Governance and Director Duties

Management Duty

Directors must act honestly and in good faith when managing the company, always prioritizing its best interests. This includes exercising due care and prudence when making decisions that impact the company’s well-being.

Care and Prudence

Yes, directors’ duties include a care or prudence element. They are expected to exercise an increased level of care, considering their position as responsible individuals entrusted with managing the company. If they breach their management duties, causing damage to the company, they may be held liable unless they can prove that the breach was due to circumstances beyond their control.

Board Member Duties

While directors’ duties are essentially the same, individual board members may differ in their responsibilities based on their skills and experience. The board may delegate certain tasks to its members, but this will not shift liability for those delegated duties.

Delegation of Board Responsibilities

The board can delegate powers to management, committees, or other persons, as long as the delegation complies with the company’s statutes and by-laws. However, such delegation does not relieve the board of its collective responsibility and potential liability for the delegated tasks.

Non-Executive and Independent Directors

There is no minimum requirement for non-executive or independent directors in private companies. In public companies operating under a one-tier system, more than 50% of the board must be independent. To qualify as an independent director, an individual must not have any material relationships with the company, including:

• Employment
• Services provided to the company
• Shareholdings
• Close personal connections