Duties within duties
Apart from the ‘eight great’ duties, directors have many other responsibilities – duties within duties if you like. When making decisions as a director, you also must consider:
- Potential long-term consequences for the company
- The interests of your employees
- Maintaining your company’s good reputation
- The need to nurture and grow profitable relationships with customers and suppliers
- The company’s impact on the environment and local community
The need to act reasonably between members, for example, treating those with few shares in the same way as institutions with a much more significant shareholding.
Are you up for the challenge?
Before accepting a role as a director or non-executive director, you must be honest with yourself. Are you capable of handling the responsibilities? In his book, ‘A practical guide for company directors’, David Duffy, writes: “When appointed, directors assume responsibilities and duties that must be carried out diligently. If they are not prepared to assume these responsibilities, then they should not become a director.”
What can happen to a director who does not carry out their duties?
If a director breaches company law, they can face serious consequences. If a shareholder, creditor, or the company, suffers loss or damage, they can take action against a director personally. However, in most cases, the company pursues directors who have failed in their fiduciary duty.