Generally speaking, in all countries, directors are expected to carry out their duties by acting with care and loyalty towards their company. Local rules and regulations differ considerably on important points, though.

Group interests vs company interests?

A common question is whether a director of a company can act in the interests of the wider group, rather than considering the immediate interests of the director’s own company. A related question is whether the position can be clarified, for example, by providing in the constitution of a subsidiary for its directors to act in the best interests of the holding company.

Long-term sustainability vs short-term gain?

Another topical question, given that climate change forecasts extend over many years into the future and are inherently uncertain, is whether directors are entitled to take long-term considerations into account.

Newly-appointed directors should make sure that they are clear as to what their duties are, especially when placed in positions outside their home jurisdiction. Established directors are also recommended to refresh their knowledge at regular intervals. Organisations, for their part, should make sure that appropriate training and guidance is available.

Questions about the responsibilities of the directors frequently arise in everyday operations or specific situations, such as cross-border M&A and international joint ventures. Directors need to understand the limits of their powers and any specific obligations, e.g. relating to possible conflicts of interest or situations of financial difficulty. Directors will also wish to understand how key decisions must be recorded, which liabilities they may incur and how these can be protected against, as well as the core administrative control and record-keeping functions which directors must carry out in the relevant jurisdiction. It may be a criminal offence to fail to do so.

Directors should bear in mind that their duties remain subject to legal change and interpretation. A number of countries have in the last few years modernised their company laws significantly. Others, such as Saudi Arabia, are still contemplating further significant reforms.

A global drive to tackle money-laundering and sources of terrorist finance also means that in many countries new transparency obligations are being introduced. These may restrict the use of nominee and corporate directors and/or require information about them to be made public.

Our guide for directors can also be used by international groups and financial sponsors for corporate planning and administration of typical subsidiary or portfolio companies. Our overviews explain typical management structures in each jurisdiction, along with specific requirements for the composition of the board, restrictions on persons who can act as directors and the formalities for appointment and removal of company officers. Information about the potential liability of directors and available indemnities, insurance and protections can also be used to assist with assessing and managing risk.