Director duties and liabilities
Section 131 of the Companies Act 1993 states that the central duty of a director is to act in good faith and in the best interests of the company.
The essentials of being a director (2018), a joint publication by the IoD and Financial Markets Authority, is intended to provide company directors and prospective directors with a quick reference and overview of some of the key things they should think about. It outlines some of the legal requirements, ethical considerations and best practice areas for directors to consider to be effective in their role.
IoD Practice Notes 1 and 4 (2011 and 2013) discuss key Australian and New Zealand cases and lessons for directors, including that directors need to understand their legally defined duties and responsibilities, the need for financial literacy, that they must not abdicate their responsibilities and that reliance on external advice may not fulfil their responsibilities.
Directors also have significant duties and obligations in relation to health and safety in the workplace.
The Financial Markets Authority outlines 8 principles of effective and transparent corporate governance in their handbook Corporate Governance in New Zealand: Principles and Guidelines.
The UK’s Financial Reporting Council also published the principles-based “Corporate Governance Code” and the “Stewardship Code”.
Martin Gelter and Geneviève Helleringer, recently published an article in the University of Illinois Law Review entitled “Lift not the painted veil! To whom are directors’ duties really owed?” It is an academic work discussing the tension between the uniformity of directors’ duties and the heterogeneity of directors themselves. It also explores areas of independence and unconscious bias.
In a June 2014 speech to the Australian Institute of Company Directors (AICD), the Chairman of the Australian Securities and Investments Commission (ASIC) sets out “'What ASIC expects of directors”.