Directors’ Duties

Abstract

A director of a company will often be dealing with other people’s property, not only in the legal sense in that he will be in charge of the property of the company, but also the company may have shareholders who have put money into the company by buying shares but have little or no control over what the directors do. Their investment will be lost if the company becomes insolvent. Also, if goods or services are supplied to a company on credit, the directors will be dealing with money to which the creditors have a claim until they are paid in full. It is obviously necessary to control the behaviour of someone in such a position of power and to impose upon him a standard of conduct which will protect people who stand to lose if the director is either incompetent or dishonest.