(D) Duty to act with due care, skill and diligence - A director has the duty to act with due care, skill and diligence. If this duty is breached and the company suffers losses, the director could be liable for those losses. - Show care and skill of his knowledge and experience – standard of care and diligence expected of a director is objective, namely, whether he has exercised the same degree of care and diligence as a reasonable director found in his position. - If a director signs a cheque without checking why the money is being paid out, there could be liability. - If the director gets his company to give a guarantee which was not really necessary, without fully understanding the background, without consulting the other directors and without getting legal advice, he has to indemnify the company for the losses suffered as a result. - While directors can delegate their duties, if they delegate their duties to someone to whom a reasonable person would not have delegated their duties, there could be liability. In addition, even if there is proper delegation but the director fails to supervise, there could still be liability. - Generally, a director is not responsible for the acts or omissions of his co-directors (such as for the frauds committed by them) solely on the ground that he did not attend board meetings. - A director is not bound to attend all meetings but should attend whenever reasonably can do so. Comment : Howard Smith Ltd v Ampol Petroleum Ltd (1974) pp.272 Comment : Punt v Symons & Co Ltd (1903) pp.273 Comment : Re W & M Roith Ltd (1967); Chew Kong Huat v Ricwil (Singapore) Pte Ltd (2001) pp.273 Comment : Section 159(a) CA Comment : Section 157(1) CA Comment : Intraco Ltd v Multi- Pak Singapore Pte Ltd (1995) pg.293 Comment : Walker v Wimborne (1975) pp.273, pg. 294 Comment : Re City Equitable Fire Insurance Co Ltd (1925) pp.274 Comment : Lim Weng Kee v Public Prosecutor (2002) pg.295 Comment : Re Railway & General Light Improvement Co (1880) Comment : Jurong Readymix Concrete Pte Ltd v Kaki Bukit Industrial Park Pte Ltd (2000), pp.274 Comment : Re Barrings plc (1999) pp. 274 Comment : Marquis of Bute’s case (1892)
2. DUTIES IMPOSED BY THE COMPANIES ACT - The basic aim is to prevent abuse on the part of the directors who manage the company. - Breach of these duties may involve civil or criminal or both civil and criminal liabilities, depending on the section in question. (A) SECTION 156 (Disclosure of interests in transactions, property, offices, etc) - When a company enters into a transaction or is proposing to enter into a transaction and a director has directly or indirectly an interest in the transaction he must declare the nature of his interest at the meeting of directors as soon as the relevant facts have come to his knowledge. - Interest shall be taken to mean material interest. - Interest of the director includes the interest of his family. This encompass all transactions where a director ’ s family member (defined to include a director ’ s spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter) has an interest. A company ’ s article of association may further provide
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- Spring '18