The common law duties of directors have now been partially codified in the Act.
The duties and liabilities of directors are dealt with in sections 75 to 77 of the Companies Act, 2008. The definition of “director” now includes:
- an alternate director;
- a prescribed officer;
- a member of a board committee; or
- a member of the audit committee of the board.
These persons are to observe the same responsibilities and face the same risks of personal liability, as a director of the company.
Two objective tests and one subjective test now apply when assessing the conduct of a director against the standard of care, skill, diligence and conflict avoidance.
Section 76(3) states: “Subject to subsections (4) and (5), a director of a company, when acting in that capacity, must exercise the powers and perform the functions of director –
- in good faith and for a proper purpose;
- in the best interests of the company, and
- with the degree of care, skill and diligence that may reasonably be expected of a person carrying out the same functions in relation to the company as those carried out by that director and having the general knowledge, skill and experience of that director.
Furthermore, section 1 defines “knowing”, knowingly” or “knows” when used with respect to a person, and in relation to a particular matter, as meaning that the person either:
- had actual knowledge of the matter; or
- was in a position in which he/she ought to have had actual knowledge, investigated the matter to the extent that would have provided him/her with actual knowledge, or
- taken other measures which would reasonably be expected to have provided him/her with actual knowledge of the matter.