Creative director, operations director, logistics director, the most significant part of these titles is the word “director”, as it creates your responsibility within a company. Everything else is secondary and is used to describe the role which is usually defined within the Articles of a company.
In a world where directors are increasingly being held accountable for their actions, it is essential that anybody planning to become a director of a company is aware of their duties and responsibilities as determined by law.
The Isle of Man Companies Act determines whether a company can have an individual or corporate director, how a director is appointed and removed, and moreover what the duties and responsibilities of a director are.
Directors are subject to a certain standard of care, skill, and diligence in discharging their duties, generally the standard applied is the “reasonable man test” a benchmark of behaviour determining whether something was reasonable or not. The duties of a director towards the company are to act in good faith and in the best interest of the company; act in accordance with the company’s constitution; act independently; not to use the company’s property, information, or opportunities for their own or anyone else’s benefit; exercise care if a situation should arise which could cause a conflict of interest; act with the care, skill and diligence and act fairly.
Directors’ powers are derived from law. However, the constitutional documents of a company may contain additional provisions relating to the management of the company. The directors should not be agents of the shareholders who cannot determine how the directors should exercise their powers; directors should be mindful of any attempts by others to influence themselves in such a way to undermine the exercise of their powers.
In some circumstances, there may not be the knowledge available to enable a director to make an informed decision, where permitted by the constitutional documents, certain powers may be delegated. However, a director cannot delegate or abrogate his overall responsibility for the affairs of a company as they remain responsible for the exercise of powers they delegate.
Directors must have a knowledge of the legal framework within the relevant laws or be reasonably able to rely on someone who possess the relevant knowledge, to ensure that the operations of the company comply with all relevant laws. Within the Companies Act a director has specific duties which if these are not adhered to may bring criminal and civil liabilities.
Good corporate governance must be fulfilled. It is important that board meetings are held at which decisions are taken and recorded. The articles of a company will determine how frequently meetings are to be held and how they are constituted. Directors are responsible for the day-to-day activities of a company including the company’s administration. Maintenance of proper minutes of meetings, accounting and statutory books must be kept, although the directors may delegate this responsibility to the company secretary or registered agent, the directors still have ultimate responsibility
Guidance on the responsibilities and duties of directors under Isle of Man Law can be found here https://www.iomfsa.im/media/1699/guidanceontheresponsibilitiesand.pdf