Appointing directors and trustees brings a set of responsibilities, known as ‘fiduciary obligations’, which such individuals must comply with.
In essence this means acting in good faith at all times. Exactly how this translates depends on the kind of organisation you are. For example, directors of a limited company have the overriding obligation to act in the best interests of the company for the benefit of its shareholders as a whole. Their duties and obligations under the Companies Act 2006 include acting within the powers set out in the company’s Articles, promoting the success of the company, exercising independent judgment, exercising reasonable care, skill and diligence, avoiding conflicts of interest, not accepting benefits from third parties and declaring an interest in any proposed transaction or arrangement. The duties and obligations under the Companies Act are the same for both executive and non- executive directors but how this works in practice can differ.
It is important to understand directors’ obligations as this is part of good governance for companies and helps to reduce risk and liability for both the company and for its directors. Your directors/trustees may need your help in understanding their new responsibilities and what these obligations mean in practice.
Joelson provides training for HR, new directors/trustees and ongoing/top up training for boards.