The duties of a director are provided under corporate law as well as the laws related to taxation, cross-border trade, and environmental protection, among others. While a company typically bears the liability for its actions, its directors can also be held personally liable under certain circumstances. Such liability to directors may arise from a failure to fulfil their duties, or if they engage in unfair or illegal practices, or abuse or exceed their authority.
Directors act as representatives of the company and custodians of the company’s funds and assets. They must manage the affairs of the company with skill and reasonable care. They must act in the best interests of the company, its shareholders and employees, above their own.
Directors can thus be held liable for their fraudulent or self-serving actions, as well as actions that contribute or result in an offence being committed by the company. Offences for which a director might be held liable range from serious crimes like capital market manipulation and investment fraud to less severe ones such as failure to meet corporate compliances by the company on time. They can also be held liable, if upon becoming aware of an offence by the company, they have failed to act, or if their actions are negligent in nature.
A director may be held liable even after their resignation for the offences committed by them or the company during their tenure.