Directors' duties

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Company law.

Directors' duties are the legal responsibilities of directors to promote the success of their companies.

Directors' duties apply to de facto directors and shadow directors, as well as to formally appointed directors.

The duties are owed to the company.

They generally include:

  • Acting within the powers of the company's constitution, and exercising those powers for the purposes for which they are given.
  • Acting in good faith to promote the success of the company for the benefit of its members as a whole.
  • Exercising independent judgement.
  • Exercising reasonable skill, care and diligence.
  • Avoiding conflicts of interest.
  • Not accepting benefits from third parties.
  • Declaring any interest in any proposed transaction or arrangement with the company.

In addition, company directors must also have regard to a number of other relevant factors and stakeholders when exercising their duties.

Under the UK's Companies Act 2006, these other factors are identified in Section 172.

See also