Accepting the appointment as a director of a company is an important undertaking and should not be done lightly.
There are many duties which by law a director owes to the company to which he or she has been appointed, and it is a very good idea to be aware of these and take them into account before signing on the dotted line.
Your attorney will be able to advise you of your obligations and the most important provisions which you need to consider.
A director’s duties are imposed by the Companies Act of 2008 (the Act) as well as by the common law.
In certain circumstances, for example in accordance with the principles of common law relating to a breach of the fiduciary duty, the Act provides for a director to be rendered personally liable for losses sustained to the company so this is a red flag for any person who is being asked simply to be a name on a list of directors.
However, a director can get from the company a written indemnification for the legal consequences of an unlawful act or omission (other than lack of authority, and reckless or fraudulent trading) and this can take the form of a written document.
A company can only provide this indemnification if its memorandum of incorporation does not prohibit this from being done, so be aware of this and make sure that this is in fact possible in a particular circumstance.
Insurance too can be taken out by the company at its cost, against most contingencies, even if the director him or herself will receive the proceeds of the policy.
Your attorney will be able to assist you in drawing up such a document to protect you if you require this as a director.
This article should not be used or relied upon as professional advice and is for information and marketing purposes. Please consult with one of our attorneys should you need legal assistance relating to this area of law.