Source of article: Business Times

Writer credits: Uma Devi

Directors have statutory and fiduciary duties.

In simple terms, the standards and scope of a director’s statutory duties are prescribed by statute and regulations.

A fiduciary duty describes a relationship between two parties that obligates one party to act solely in the interest of the other. A fiduciary relationship exists between a director and the company.

A director is reposed with the trust, confidence and reliance by the stakeholders of the company to exercise his or her discretion, power and/or expertise in the best interests of the company.

In exercising the powers of the Board and in making decisions on behalf of the company, a director cannot place himself in a conflict of interests position, nor should the director be motivated by any collateral or improper purpose.

A director has to act in uberrima fides, ie with utmost good faith in the discharge of his fiduciary duties to the company. There must be full and frank disclosure of a director’s direct or indirect interests in any corporate action or decision made by the director; the interests of the director in any corporate action or transaction must be approved or subsequently ratified by non-interested directors or shareholders. The interests of a director to be disclosed and approved includes that of his family members in any transaction involving the company.

The duties and responsibilities of a director are indeed heavy. Persons who accept invitations to take up board positions should be mindful of the responsibilities of a director.

Directors, both executive and non-executive, are jointly and severally responsible for all board decisions.

A director must be able to satisfy the standards of due care and diligence expected of the director when discharging his roles and responsibilities.


Directors’ roles and responsibilities in guiding companies through corporate actions

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