Trustee Duty

Duties of Executive and Non Executive Directors

Directors of Companies Directors of companies whether public or private have various responsibilities towards their companies, breach of which may not only be detrimental to those companies and their shareholders but also may lead to civil and criminal liability of the individual director concerned. “Executive and Non Executive Directors” Executive and Non Executive Directors have the same responsibilities in law. An “Executive Director” is a director who has separate responsibilities within the company as an Executive. The role of a non executive director has a positive contribution to making and ensuring that the board fulfils its main objectives. He can exercise an impartial influence and bring to bear experience gained from other fields; executive directors would therefore be well advised to consider the appointment of such directors to serve alongside them. Powers of Directors Directors derive their power from the Articles of Association and the Memorandum of Association. Directors must exercise their powers collectively and majority decisions will prevail. Duties of Directors The duties of directors are owed to the company as a whole. Their duties and responsibilities arise both out of common law and out of statute and can be classified as follows:• • • Fiduciary duty to act honestly and in good faith; Duty to exercise skill and care; and Statutory duty

Directors should bear in mind that breach of these duties may result in their being judged unfit to be concerned in the management of a company and lead to their disqualification as directors.

Page 2 Fiduciary Duty Four separate rules have emerged:i) Directors must act in good faith in what they believe to be the best interests of the company. Generally speaking, the interests of the company are to be equated with the interests of its members as a whole. As between different groups of shareholders, the directors must act fairly. Directors must exercise their...