Duties of Director:

The duties of directors of a company have been elaborately explained by Romer L. J in Re City Equitable Fire Insurance Co[1]. The important duties are quoted from this case and summarized below:

1. Distribution of work:

The manner in which the work of a company is to be distributed between the board of directors and the staff is a business matter to be decided on business lines.

2. Good faith:

Every director must act honestly and in the interest of the company.

3. Reasonable care:

A director “must exercise such degree of skill and diligence as would amount to the reasonable care which an ordinary man might be expected to take in the circumstances on his own behalf.”

4. Degree of skill:

A director “need not exhibit in performance of his duties a greater degree of skill than what can be reasonably expected from a person of his knowledge and experience; in other words he is not liable for mere errors of judgment.”
5. To attend meetings:

A director “ is not bound to give continuous attention to the affairs of his company; his duties are of an intermittent nature to be performed at periodical board meetings and the meetings of any committee to which he appointed, and though not bound to attend all such meetings, he ought to attent them when reasonably able to do so.”

6. The director’s duty of disclosure:

The Companies Act of 1956 maakes it obligatory upon directors to disclose certain facts to the company: (1) If a director is interested in any contract or arrangement proposed to be entered into by the company, he must disclose the interest to the Board of directors.—Sections 299.

(2) He must disclose, for the purpose of entry in the register of directors his name, address, occupation, nationality and certain other particulars.–Sections 303 and 305. (3) He must disclose the number of shares of the company which he holds.–Sections 308.

7. Other duties:

In addition to the duties mentioned above every director have the following duties: 1) A director has to send to the registrar stating his consent to the post of director. –Sections 266. (2) Every director must obtain the qualification, share of directorship according to the article of the company.—Section 270. (3) Every director must pay his share monies according to the ‘Call’ of the Board of directors. (4) A director must not participate in the meeting of the Board of directors, when they decided his contract with the company.

Skills of Director:

For the development and success of the company - Directors are long-term thinkers. Average thinkers think only about the present, and about immediate gratification. But skills of directors think about where they want to be in five and ten years, and what they have to do each hour of each day to make their desired future a reality.

1. Directors inspire others because they are inspired themselves: They are excited about the possibility of creating an exciting future for themselves. They get up every morning and they see every effort they make as part of a great plan to accomplish something wonderful with their lives.

2. Directors are optimistic: They see opportunities in everything that happens, positive or negative. They look for the good in every situation and in every person. They seek the valuable lessons contained in every problem or setback. They never experience "failures;" instead, they write them off as "learning experiences." 3. Directors have a sense of meaning and purpose in each area of their lives: They have clear, written goals and plans they work on every day. Directors are clear about where they are going and what they will have to do to get there. Their behavior is purposeful and goal-directed. As a result, they accomplish five and ten times as much as the average person who operates from day to day with little concern about the future.

4. Directors accept personal responsibility: Directors never complain, never explain. Instead of making excuses, they make progress. Whenever they have a set-back or difficulty, they repeat to themselves, "I am responsible! I am responsible! I am responsible!" 5. Directors see themselves as victors over circumstances rather than victims of circumstances: They don't criticize or blame others when something goes wrong. Instead, they focus on the solution. 6. Directors are action-oriented: They are constantly in motion. They try something, and then something else, and then something else again. They never give up. 7. Directors have integrity: They tell the truth at all times. They live in truth with themselves, and they live in truth with others.

Under above mentioned Skills are necessary of a director, which is related to achieve the companies’ goal and success

1. Exceptional leadership, business and interpersonal proficiency
2. Prior thriving managerial experience
3. Be able to set business targets, time lines, plans and financial targets
4. Be able to stimulate employees, teams and departments
5. Be a superior net worker, negotiator, and business leader
6. Be successful, self directed, flexible and tactical
7. Excellent computer or technology skills
8. Be able to garner the fidelity, esteem and confidence of employees
9. Be a visionary
10. High quality communication and presentation dexterity

Diligence of Director:

Diligence is an alternative formulation of the duty of care. It is a synonym for care.

In Australia, s 180(1) of the Corporations Act 2001 states:

A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a) Were a director or officer of a corporation in the corporation’s circumstances: and

(b) Occupied the office held by, and had the same responsibilities within the corporation as, the director or officer[2]

This provision outlines an objective test for the standard of care that is determined by considering the corporation’s circumstances, the office held and the responsibilities the office carries within the corporation[3].
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[1] (1925) 1 C
[2] Corporations Act 2001 (Cth). Note that this provision is not restricted to directors but also applies to
‘officers’ of the corporation.
[3] ‘The director may not plead personal idiosyncrasies in defence of a claim that he or she has breached the duty of due care and diligence.’ ASIC v Adler [2002] NSWSC 483, ¶57.