Directors' Responsibilities

3. Fiduciary Responsibilities

As a director, you must act in a way which you think is most likely to promote the success of the company for the benefit of its shareholders. You need to consider a number of statutory factors, including the long-term consequence of decisions, your firm's reputation and the interests of other stakeholders, such as employees and the community.

3.1 The company is a separate legal entity from its directors, shareholders and employees. The best interests of the company are not always the same as the best interests of the shareholders.

• You must consider the interests of other stakeholders such as creditors and employees.
• You must consider the long-term prospects of the company and its reputation.

3.2 You must give equal consideration to all shareholders.

• Even if you hold most of the shares, or act as the nominee of the major shareholder, you must consider the interests of shareholders as a whole.
• In practice, it is very difficult for a minority shareholder to have a significant say in decisions made by majority shareholders.

3.3 You must not use your position to make private profits at the company's expense.

• If you are found to have secretly profited from a contract, you might be forced to hand those profits over to the company.

3.4 You are legally obliged to declare any actual or potential conflict of interest.

• For example, if you have interests in another company with which your company is planning to do business.
• The Articles may say you should not vote on such a deal and, if you do, your vote is disregarded.

3.5 If you, or someone connected with you, such as a relative, personally plan to enter into substantial deals with the company, they must be approved by the shareholders.

3.6 Your contract of employment must be approved by the shareholders in a general meeting if your term of employment is capable of exceeding two years.