Directors' duties

Directors' duties are a series of statutory, common law and equitable obligations owed primarily by members of the board of directors to the corporation that employs them. It is a central part of corporate law and corporate governance. Directors' duties are analogous to duties owed by trustees to beneficiaries, and by agents to principals.

Among different jurisdictions, a number of similarities between the framework for directors' duties exist:

directors owe duties to the corporation,^[1] and not to individual shareholders,^[2] employees or creditors outside exceptional circumstances
directors' core duty is to remain loyal to the company, and avoid conflicts of interest
directors are expected to display a high standard of care, skill or diligence
directors are expected to act in good faith to promote the success of the corporation

^ e.g. Percival v Wright [1902] Ch 421
^ e.g. Coleman v. Myers [1976] NZHC 5, [1977] 2 NZLR 225, High Court (New Zealand), where the board is authorised by the shareholders to negotiate with a takeover bidder. It has been held in New Zealand that "depending upon all the surrounding circumstances and the nature of the responsibility which in a real and practical sense the director has assumed towards the shareholder,"

[1] .g. Percival v Wright [1902] Ch 421

[2] .g. Coleman v. Myers [1976] NZHC 5, [1977] 2 NZLR 225, High Court (New Zealand), where the board is authorised by the shareholders to negotiate with a takeover bidder. It has been held in New Zealand that "depending upon all the surrounding circumstances and the nature of the responsibility which in a real and practical sense the director has assumed towards the shareholder,"

[1]

[2]