A fiduciary relationship is a relationship of trust. This relationship places a duty on directors to act within the best interests of the company, in good faith and honesty.
A duty of care and skill requires directors to act with a certain level of care and skill while fulfiling their role as company directors. This means that the director must exercise the care, skill and diligence that would be exercised by a reasonably diligent person with:
the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions of the director in relation to the company (ie the minimum standard for directors across the board), and
the general knowledge, skill and experience that the director has (ie a subjective assessment based on the director’s specialist knowledge, skill and experience)
Most of the directors’ duties are fiduciary duties.
What are the duties of a company director?
The director’s duties of a statutory director are:
- to act only within the powers conferred upon the director by the company’s constitution (ie the memorandum of association and the Articles of association)
- to promote the success of the company, which involves the director acting in good faith and following best practice with regard to business transactions and the impact on the environment and community
to exercise independent judgement
to manage the company with reasonable care, skill and diligence
to avoid direct or indirect conflicts of interest
to refrain from accepting gifts from others
to declare any personal interest (be it direct or indirect) in proposed transactions and/or company business