duties of directors

Definition

Based on the principle that the directors must act with honesty, diligence, and prudence, these duties include duty of (1) Avoidance of conflict of interest: directors must declare their interest in any transaction in which the firm is involved, and follow the instructions of the board of directors in this regard. (2) Care and skill: directors must exercise caution and competence in all situations as reasonable persons would under the circumstances. (3) Confidentiality: directors must not make improper use of the privileged information obtained as a board member. (4) Fairness: directors must deal with other directors and stakeholders without bias or favor. (5) Honor: directors must not engage in any conduct that may bring disrepute to the firm and/or other directors. (6) Independence: directors must not compromise on the right to exercise an independent judgment but, at the same time, must restrict their independence in good faith to favor a collective decision that will benefit the firm. (7) Loyalty: directors must act in good faith in the best interest of the firm and whole heartedly assist the chief executive in achieving the firm's success.