DIRECTORS OF COMPANY BOARDS HAVE PERSONAL AND COLLECTIVE LIABILITIES.

High Level overview of the Duties of the Board

Company boards and directors of the boards have legal and fiduciary duties to the organisations and shareholders they work for.  The legal duties are the roles and responsibilities prescribed by the laws, regulations and leading practices. The fiduciary duties are the natural expectations from the individuals or entities involved in the system.

The legal duties of the board are primarily providing oversight, advice and guidance to the executive management on strategic matters as well as undertaking strategic decisions and actions on matters that require board attention.

The fiduciary duties of the board and directors of the board have been classified into three, namely: duty of care, loyalty and obedience.

• Duty of care requires that the directors of the boards should not be value destroyers. They should be diligent in handling the affairs of the company. This means that while taking strategic decisions and actions or providing advice and guidance on matters, the directors should ensure that the decisions, actions, advice or guidance will contribute to achieving the corporate goals and objectives.

• Duty of loyalty means that the directors of the board should always put the best interest of their organisation above every other stakeholder such as shareholders, executive management, employees, regulators, customers, suppliers, host communities and others. It is important to recognize and understand the desires of the stakeholders but only the appropriate needs that are in alignment with the core values and goals of the organisations should be considered.

• Duty of obedience demands that the directors should comply with the rule of law, regulations and company policies.

High Level Overview of The Rights of The Boards and Directors

Directors of the board need rights for inspiration and reinforcement of their commitment to perform their legal and fiduciary duties to the organisations. Some of these rights which appear common in most jurisdictions have been listed below:

directors of the board need:

• unlimited and timely access to the right and complete records and information about their company to help them in making informed decisions and taking actions that will not jeopardize the interest and reputation of their company.
• continuous communication and healthy interaction with board members, executive management, senior management and others within and outside the organisation  to help them gain insight and understanding of the company’s business and ongoings (good or bad), This include information on whether the applicable laws, regulations and company policies have been complied with.
• probe on issues and ask the right questions to get better clarification and understanding of the issues in order to express objective opinions on the matters for the best interest of the company.
• call both management and board members to order on occasions of bad behavior to prevent reputational damage.
• legal protection from business judgement rule to prevent past actions taken in good faith for the company from being subjected to criticism and investigation by management, new board or others after the tenure of the board or exit of a director,
• obtain insurance cover against liabilities that may arise from litigations from aggrieved parties such as employees, customers, third party service providers, general public, host communities, pressure groups and others when acting in good faith for the best interest of the company.