Duties of Director of Campany

A managing director occupies the dual capacity of being a director as well as employee of the company. he is not a mere servant, he is an agent of the company with capacity to bind the company within the sphere of management authorized to him, as in the case of Happy Home Builders (Karnataka) P Ltd V. Deltite Enterprises, (1994).

The day to day management is entrusted to the managing director who can exercise powers of management without referring to board. It is necessary that the articles must provide for such an appointment being made, Boschoek Proprietory Co. Ltd V. Fuke, (1906).

Duties of Directors:

The relationship between a company and its directors is that of principal and agent, and as agents the directors stand in a fiduciary relationship to their principal, the company. Their fiduciary duties in relation to good faith and loyalty are analogues to those of trustees properly so called, but in regard to the duty to use skill and care in the conduct of the company’s affairs the standard required of Directors differs from that required of trustees. Furthermore, although the authority of Directors to bind the company is collective as a board, the duty of good faith is owed by each director individually, but only to the company and not, for example, to individual members as in the case of Percival V Wright, 1902. However, directors may stand in a fiduciary relationship to shareholders where they have been authorized by the shareholders to negotiate with a person interested in making a take-over bid. (Briess V Woolley) it should be noted that, however, that the rule in Percival V Wright was severely criticized by both the Cohen and Jenkins committees and its removal from the law advocated. However the duties of the directors are discussed as below;

Duty to act Bona Fide:

This duty requires directors to act in what they honestly believe to be the best interests of the company. It is not enough that the transaction is honest; if it is not in the interest...