Directors duties and the role of corporate governace in company law

Director 's duties and the role of corporate governance in company law

Table of Contents

TOC \o "1-3 " \h \z \u HYPERLINK \l "_Toc6 " 1 . Introduction PAGEREF _Toc6 \h 1

HYPERLINK \l "_Toc7 " 1 .1 Who is a Director ? PAGEREF _Toc7 \h 1

HYPERLINK \l "_Toc8 " 1 .2 Shadow Directors PAGEREF _Toc8 \h 1

HYPERLINK \l "_Toc9 " 1 .3 Directors ' Duties PAGEREF _Toc9 \h 2

HYPERLINK \l "_Toc0 " 1 .4 Duties of Honesty and Good faith (Fiduciary Duties ) PAGEREF _Toc0 \h 3

HYPERLINK \l "_Toc1 " 1 .6 Duty to

act within powers PAGEREF _Toc1 \h 4

HYPERLINK \l "_Toc2 " 1 .7 Duty to promote the success of the company PAGEREF _Toc2 \h 4

HYPERLINK \l "_Toc3 " 1 .8 Duty to exercise independent judgment PAGEREF _Toc3 \h 6

HYPERLINK \l "_Toc4 " 1 .9 Duty to exercise reasonable care skill and diligence PAGEREF _Toc4 \h 6

HYPERLINK \l "_Toc5 " 1 .10 Duty to avoid conflicts of interest PAGEREF _Toc5 \h 7

HYPERLINK \l "_Toc6 " 1 .11 Duty not to accept benefits from third parties PAGEREF _Toc6 \h 9

HYPERLINK \l "_Toc7 " 1 .12 Duty to declare interest in proposed transaction or arrangement PAGEREF _Toc7 \h 10

HYPERLINK \l "_Toc8 " 1 .13 look on the Director Duties and its consequences PAGEREF _Toc8 \h 11

HYPERLINK \l "_Toc9 " 1 .14 Minimum Number of Directors PAGEREF _Toc9 \h 12

HYPERLINK \l "_Toc0 " 2 . What is corporate governance PAGEREF _Toc0 \h 13

HYPERLINK \l "_Toc1 " 3 . Corporate governance as a determinant of performance PAGEREF _Toc1 \h 17

HYPERLINK \l "_Toc2 " 3 .1 Directors Duties and Corporate Governance PAGEREF _Toc2 \h 25

HYPERLINK \l "_Toc3 " 4 . Suggestions by Cadbury Committee PAGEREF _Toc3 \h 32

HYPERLINK \l "_Toc4 " 5 . Recommendations PAGEREF _Toc4 \h 40

HYPERLINK \l "_Toc5 " 6 . Conclusion PAGEREF _Toc5 \h 44

HYPERLINK \l "_Toc6 " References PAGEREF _Toc6 \h 46

Introduction

A company is an artificial abstract legal entity it must exercise its powers through the medium of human agencies that are authorized to act on its behalf . The members are to provide in the articles the manner in which and by whom the business of the company would be managed . Normally the members elect a number of directors who act as a board . Under the Companies Ordinance there must be three directors in a public company and two directors in a private company

Who is a Director

There is no comprehensive definition of the term . Company law simply states that the term `Director ' includes any person occupying the position of a director , by what ever name called . What ever term is used the test is functional not of title . Mere of someone as a director will not make him director in law . From this definition it is clear that a director may not be designated as director but he may be referred by any other word . Thus it is sufficient for a person to work as a director and the designation is immaterial

Shadow Directors

A shadow director is a person in accordance with whose...