From a corporate law perspective civil liability may arise from common law and equity as well as from breach of statutory provisions set out in the Companies Law, Cap. 113. Risks arising out of common law relate to:
- the duty of care and skill;
- the duty to act honestly and bona fide in the interests of the company;
- he duty of diligence.
Generally such duties are owed to the company; this means that directors should have regard to the interests of the shareholders as a whole and not to the interests of individual shareholders.
Under the Companies Law, Cap.113, statutory liability of directors who were in default may arise:
- on misuse of the corporate seal;
- on misstatements in a prospectus;
- on irregular allotments;
- in the case of failure to repay application money for shares or debentures if the minimum subscription has not been subscribed;
- by an order of court in the winding up or other procedure, under the fraudulent trading provisions.
Personal civil liability may arise as to fraud and other torts such trespass, negligent misstatements, patent infringement etc. A director will not be held responsible for the fraud or tort of his co-directors unless he has expressly or impliedly authorised it.