What is required of a director?
Directors have a duty:
- of care and diligence
- not to improperly use their position or information
- not to trade while insolvent
- of good faith
- to disclose conflicts of interest
A director’s obligations
As a director together with the other directors, you will control the corporation’s business. The corporation’s rule book will set out the powers and functions of the directors.
A director has a common law right to inspect documents of the corporation, if required, in order to assess the corporation’s performance.
A director must:
- be fully up to date on what the corporation is doing
- find out for himself or herself how any proposed action will affect the corporation’s business performance, especially if it involves a substantial amount of the corporation’s money
- obtain outside professional advice when required to make an informed decision
- ask questions of managers and staff through the chair at directors' meetings about how the corporation is going
- take an active part in directors' meetings.
Remember, only be a director if you are willing to put in the effort.
Resources and further information
Download a template for giving your consent to become a director (17kb Word doc).
See also the fact sheets on:
These issues of the ORIC Oracle are also relevant:
- Planning and holding directors' meetings (November 2017)
- Making decisions (August 2017)
- How your money story flows (May 2017)
- Independent directors can add a skill set (February 2016)
- Directors at the helm (May 2013)