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  • Prasna Devi

What Would Happen If Directors Breach Their Duty?

Over the years, we have heard of and personally encountered situations where directors in some organisations are not fully aware of their responsibilities. Some of our clients even wondered if it’s necessary to focus on it and if their decisions really need to be made formally at board meetings?


Well, the answer is yes. Why? Because directors’ duties are now codified in company law legislation and directors can be sued for breaching their duties. ⚖️ In some cases, it can even lead to imprisonment!


GENERAL RESPONSIBILITIES OF A COMPANY DIRECTOR

As per the Companies Act, some of the general responsibilities of a director include:

  • Directors must exercise their powers for a proper purpose and in good faith, in the best of the company at all times.

  • Directors should also exercise reasonable care, diligence and skill.

In the context of business judgement, the directors have several responsibilities such as:

  • Make the business judgement for a proper purpose

  • Must not have a material personal interest in the subject matter of the business judgement

  • Always be informed on the subject matter of the business judgement to the extent that the director reasonably believes to be appropriate

At JS Partners, we believe that directors play a significant role in any corporate governance system. We work very closely with our clients to guide and share the importance of directors acting in the best interest of the company.


If you would like to discuss further, reach out to us via https://wa.me/60122192492.


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