In the uk companies act 2006 section 174 and in the

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In the UK Companies Act 2006 section 174 and in the USA and Australia, an objective test has already been adopted. 2013/2/18 10
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2. A director’s duty of care A director is not bound to give continuous attention to the affairs of his company. His duties are of an intermittent nature to be performed at periodical board meeting, and at meetings, of any committee of the board upon which he happens to be placed. He is not, however, bound to attend all such meetings, though he ought to attend whenever in the circumstances he is reasonably able to do so. Executive directors’ duties are set out in his employment contract . Re Copyright (2004 HKCA) held that when deciding whether to disqualify a director, the court uses a higher standard of whether the director has constantly been attentive to company affairs. Note: This standard is higher than the normal standard used in Re City Equitable Fire Insurance. 2013/2/18 11
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A director’s duty of care In respect of all duties that may properly be left to some other official, having regard to the needs of the business and the articles of the company, a director, in the absence of grounds for suspicion, is justified in trusting that official to perform such duties honestly. Directors need not be responsible for all mistakes, only for negligent mistakes which cause duties losses suffered by his company. Director should be removed from office if he is persistently absent from board meetings without a valid reason for more than six months. Directors need to take into account creditors’ interests when company is insolvent 2013/2/18 12
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WEST MERCIER SAFETYWEAR V DODD [1988] BCLC 250 In West Mercier Safetywear v Dodd [1988] UK , D, a director of D Ltd and its wholly owned subsidiary WMS, arranged for the transfer of £4,000 from WMS to D Ltd in order to decrease D Ltd’s indebtedness and so prevent the operation of his personal guarantee for the debts of D Ltd. The liquidator of WMS applied for a declaration that D was guilty of misfeasance ( 滥用职权) and breach of trust. D was ordered to repay the £4,000 . 2013/2/18 13
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DANIELS V ANDERSON [1995] 16 ACSR 607 A series of currency transaction were carried out by the managers of AWA Ltd. The transactions resulted in substantial losses which AWA s auditor failed to detect. It was held: The omission by the board of directors in allowing a grossly negligent management to preserve with the foreign exchange operations in an entirely unsatisfactory manner were causes of the loss suffered by AWA. The auditors were held liable for 66.6% of AWA s loss 2013/2/18 14
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Director’s Duty of Care and Skill in China’s Company Law 2013/2/18 15 “The directors, supervisors and senior managers shall comply with laws, administrative regulations and the articles of association. They shall bear the obligations of fidelity and diligence to the company . No director, supervisor or senior manager may take any bribe or other illegal gains by taking the advantage of his authorities, or encroach on the properties of the company.”
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