A director is bound by the terms of the company’s charter set out in the Memorandum and Articles of Associations. The director can exercise all the powers permitted by the memorandum and articles which are not reserved to be exercised by the shareholders in general meeting. If the director is the majority shareholder and sole director, the rule may be despotic.
The director must, however, act in accordance with the Companies Acts and the general law and the director has three primary duties:
-
A fiduciary duty to the company to act honestly and in good faith in the best interests of the company as a whole;
-
A duty to exercise such a degree of skill and care in carrying out his duties as might reasonably be expected from someone of his ability and experience.
-
A duty to fulfill the company’s statutory obligations imposed by the Companies Acts and other legislations at all times.
Directors in position of trust
The duty to act honestly, in good faith and in the best interests of the company, which imposes a trustee’s responsibility on directors to take proper care of the company assets and to ensure payments are properly made and supported by adequate documentation. Directors must not make a personal profit at the company’s expense and must disclose to the other directors at the board meetings any interest in company transactions. Disclosure should also be made at the general meetings and it should be included in the minutes.
The director’s personal interests must not conflict with those of the company and they must not use the company assets, including knowledge acquired through the company, for personal benefit.
Canterbury Accountancy - Helping small companies understand the company law.
