Duties Of Directors

Common Law Duties

All Directors have four basic duties in law:

  • Care and diligence – make a positive effort to understand matters, use independent informed judgement in the best interests of the organisation.

  • Act in good faith - in the best interests of the organization and for a proper purpose, including to avoid conflicts of interest, and to reveal and manage conflicts if they arise. 

  • Proper use of position - to not improperly use their position to gain an advantage for themselves or someone else or to the detriment to the organization.

  • Proper use of information - to not improperly use the information they gain in the course of their director duties to gain an advantage for themselves or someone else or to the detriment to the organisation.

Each decision of a director can be scrutinised against what could have been done to most benefit the company by that director. 

Breaches can result in legal proceedings for any damages suffered and in some cases criminal charges.