Director’s Duties; What is Expected

Being asked to join a company’s Board of Directors is often associated with great stature. There is a level of appreciation that is owed to the duties and responsibilities imposed on the director that they should, prior to accepting this role, be aware of, in order to properly discharge these duties. This is why the decision to accept an invitation into a company’s Board of Directors should not be taken lightly. 

A director is responsible for the management of the company. In controlling the affairs of the company, directors are required to act within the powers afforded to them by the company’s Articles of Incorporation and the Companies Act (“the Act”).

Understanding The Fiduciary Duty 

In carrying out their powers, directors, by law, have a fiduciary duty to the company. This fiduciary duty is owed solely to the company. The Act requires every director of a company to act honestly and in good faith with a view to the best interest of the company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In determining the best interests of the company, a director must consider the interests of the company’s shareholders and employees as well as the community in which the company operates. 

Generally, this fiduciary duty ceases when the person ceases to be a director of the company. A director may be removed from their role as a director by way of resignation, retirement, death and other circumstances in accordance with the company’s Articles of Incorporation. The procedure for the removal of a director is a technical process, laid out in the Act, and should not be taken to deprive the director of compensation or damages payable to him. However, there may be cases where a court will find that this fiduciary duty should continue after they have ceased to be a director. In these circumstances, a former director may be prohibited from competing with the interests of the company and diverting corporate opportunity.

Duty to Avoid Conflicts of Interest and Make Disclosures

Directors must avoid circumstances which, whether directly or indirectly, constitute a conflict of interest with the interests of the company. In the event there is a conflict of interest, the director has a duty to disclose the nature of his interest when his interest first arises, or at the very latest, at a meeting of the directors when this interest is first considered. The director must not take part in any deliberations at the said meeting. 

Directors must comply with various obligations under the Act, such as the duty to disclose to the company, any interest in shares in, or debentures of, the company or any other body corporate, being the company’s subsidiary or holding company or subsidiary of the holding company. There is also a duty to disclose to the company interest in any contracts with the company. In addition, directors have a duty to disclose payments for loss of office made in connection with the transfer of shares in the company. 

General Obligations

Directors are required to devote sufficient time to allow for the proper discharge of their duties and are expected to ensure compliance with the provisions of the Act. This includes the holding of the annual general meeting of the company and the keeping of proper books and documents of account of the company. Additionally, preparing for and attending Board meetings and keeping informed on the company’s business is required in carrying out their role as a director.

Given the recent amendment to the Companies Act (“the Amendment Act”), it is also important that directors have a fulsome understanding of the obligations that the company and its officers have by virtue of the Amendment Act. The obligations under the Amendment Act include the requirement of the company to collect and maintain accurate, adequate and up-to-date beneficial owner and member information and to notify the Registrar of Companies of changes to this information. 

Generally, directors are responsible for the appointment of the Company Secretary. Directors should, therefore, ensure that they appoint a competent Company Secretary and/or outsource corporate secretarial services to persons who are capable of ensuring all obligations under the Companies Act are complied with. 

Failure to Carry Out Duties 

A shareholder, another member of the Board of Directors or the trustee of the company, under the Act, can make a complaint in writing to the Registrar of Companies (“the Registrar”) in relation to the grounds in which they believe a director is unfit to be concerned in the management of the company. The persistent failure to attend board meetings, a breach of the director’s fiduciary duty and to the extent of the director’s responsibility, failure by the company to comply with the provisions of the Act are a few circumstances where a director may be considered unfit. The Registrar upon receipt of this complaint will investigate the matter and allow for the complaints to be heard. If satisfied that there are sufficient grounds, the Registrar will allow the matter to be brought to Court. 

In light of the duties imposed on a director, it is important to be informed and stay abreast of all that will be required to properly discharge these duties and to avoid liability under the Act. It is advisable to speak with the appropriate person such as a lawyer or a licensed corporate services provider to obtain clarification on a director’s ongoing obligations and duties.

Rachel Poole is an Associate at Myers, Fletcher & Gordon and is a member of the firm’s Commercial Department. Rachel may be contacted via or This article is for general information purposes only and does not constitute legal advice.

This article is for general information purposes only and does not constitute legal advice.

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