COMPANY LAW IN GHANA- DUTIES OF DIRECTORS ( PART 1)

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DUTIES OF DIRECTORS AND THEIR ENFORCEMENT (PART 1) 1. INTRODUCTION: THE NATURE OF DIRECTORS’ DUTIES The starting point in company law is that directors are fiduciaries of the company. Section 190(1) of the Companies Act, 2019 (Act 992) provides: “A director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith…” This provision codifies long-established equitable principles. The relationship is not with shareholders individually, but with the company as a separate legal entity. This position is consistent with classical authority: • Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq HL 461 • Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378 • Percival v Wright [1902] 2 Ch 401 The essence is that directors are: • fiduciaries (loyalty-based duties), and • managers (care and skill duties). 2. CLASSIFICATION OF DIRECTORS’ DUTIES Under Act 992 and the common law, the duties may be grouped into: A. Fiduciary Duties • Duty of utmost good faith • Duty to act in the best interest of the company • Duty to avoid conflict of interest • Duty not to make secret profit • Duty not to compete B. Duties of Care, Skill and Diligence • Objective + subjective standard • Business judgment rule C. Statutory Duties • Disclosure of interest (ss 193–195) • Confidentiality (s 198) • Proper use of powers (s 190(3), s 191) 3. DUTY TO ACT IN UTMOST GOOD FAITH Statutory Basis Section 190(1) Act 992. Content • Honesty • Loyalty • Absence of bad faith A director breaches this duty where he acts: • for personal benefit, or • for collateral purposes. Authority In Regal (Hastings) Ltd v Gulliver: A fiduciary must account for profit irrespective of good faith. Similarly, in JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, failure to disclose material facts constituted breach. 4. DUTY TO ACT IN THE BEST INTEREST OF THE COMPANY Statutory Basis Section 190(2) Act 992. This requires the director to act: • in what he honestly believes is the best interest of the company • as a whole