Small Business Week 2018: Director Duties
- • any contract between a director and the company which could result in profit for that director,
or which furthers the interests of that director’s relatives or friends;
- • accepting a gift as a token of friendship from an employee of the company before a vote about
that employee takes place;
- • disclosing confidential information about the company for personal use;
- • and taking part in a decision to terminate an employee of a company who has had personal issues
with that director’s child or spouse.
- • disclose the interest to the other directors;
- • leave the meeting when the matter is discussed and voted on;
- • don’t do anything that might influence the discussion or vote; and
- • ensure the conflict has been recorded in the meeting minutes.
The other directors may approve a transaction that involves a conflict for a director, but the interested director must abstain from voting.
In practice, a director fulfills this duty of care by making informed decisions. Directors should always spend the time necessary to make reasonable decisions. This includes attending board meetings, learning about the issue, seeking input from the company’s officers, asking necessary questions and assessing the implications of a decision before voting.