Many members tell us that they are interested in developing their careers into non-executive director (NED) roles.
There’s no doubt that chartered secretaries, with their wealth of work experience, can make a great contribution to organisations of all kinds in a NED role.
However, the right opportunities may not come along at once, and it may require gaining initial experience as an unpaid trustee of a not-for-profit or as a school governor, for example, or networking with different groups of people.
Overview of Duties
A director must act within his powers under the company’s constitution and only exercise his powers for the purpose for which they were conferred (CA 2006, s171).
A director must ‘act in a way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole’ (CA 2006, s172). This duty applies to all directors’ actions, not just those exercised at board meetings. When making decisions, directors must ensure they have regard to the likely consequences of the decision over the long term, which means they must take account of the:
• interests of employees
• impact on the community and environment
• need to foster business relationships with suppliers, customers and others
• need to act fairly between members
• a need to maintain a reputation for high standards of business and conduct
A director must exercise independent judgement (CA 2006, s173). This duty largely codifies the requirement in common law for directors to exercise their powers independently, without subordinating their powers to the will of others and without fettering their discretion.
A director must exercise such reasonable skill, care and diligence as would be exercised by a reasonably diligent person with:
• the general knowledge, skill and experience that could reasonably be expected from a person carrying out the director’s functions; and
• the director’s actual general knowledge, skill and experience (CA 2006, s174).
A director has a statutory duty to avoid any situations in which he has, or could have, a direct or indirect interest that conflicts, or could conflict, with the interests of the company (CA 2006, s175). This applies in particular to the exploitation of property, information or opportunity regardless of whether the company could take advantage of it. It applies to a conflict of duty, as well as a conflict of interest and includes the interests of ‘connected persons’.
A director has a statutory duty not to accept a benefit from a third party which is given because of the position held by the director or because of anything the director has done in his capacity as a director (CA 2006, s176). In brief, acceptance of benefits is not subject to any ‘de minimis’ limit and is only permitted where the matter is approved by the company’s members or it can reasonably be regarded that it will not give rise to a conflict of interest with the company.
A director of a company has a statutory duty to disclose any direct or indirect interest he has in a proposed transaction or arrangement with the company (CA 2006, s177). Furthermore, the director has a duty under CA 2006, s182 to declare any interest held, direct or indirect, in an existing transaction or arrangement.
