The checklists below have been designed as a practical guide to the potential duties and liabilities of directors of companies. They are general non-exhaustive checklists and are not jurisdiction-specific. They should not be used as a substitute for professional advice on issues within your jurisdiction and should not be taken as providing legal advice on any of the topics addressed.
Global Director's Checklist
Liability for Loss
Ensure you are fully aware of:
Be aware of the following possible claims against directors:
The following are a few examples of where liability may be established:
There are a number of criminal exposures for directors, including but not limited to:
In addition to civil and criminal liabilities, note that directors are also subject and face potential exposure to liability under financial, competition, health and safety and environmental regulations.
Review company documents carefully and ensure you understand:
Directors will often be subject to legislation governing directors’ duties to the company and its members.
Do you have to act in the best interests of creditors?
Breach of statutory duties potentially exposes directors to claims from the company and/or its shareholders and, in some cases, its creditors. It may be possible in some jurisdictions for directors to be personally liable for the loss.
Directors owe fiduciary duties to their companies. When carrying out your duties as a director, bear the following in mind:
Particular D&O Exposures Checklist
Exposures for directors of publicly listed companies
Be aware that directors may be personally liable for loss resulting from untrue or misleading statements in or omission of required information in listing particulars in respect of an offer of securities to the public or an admission to trading on a regulated market.
If the director has been dishonest or reckless regarding the truthfulness of the information provided, they may be subject to both civil and criminal prosecutions. Directors should:
Exposures following Company Insolvency
It is not uncommon for directors to face costly proceedings in circumstances where their company becomes insolvent, as liquidators will carry out extensive investigations into the causes and will often seek to hold persons responsible
Many jurisdictions are focused on stamping out bribery in companies and have legislated accordingly. It is important to bear in mind that statutes covering bribery are often international in scope
Directors should be mindful:
Directors may also be exposed to liability when the company itself is being investigated. In the UK and US, for example, prosecutors can make deals with the company in exchange for lighter penalties. Such arrangements require the full cooperation of the company, which could include the company providing the prosecutor with information and documents during the course of its investigation which can then be used for the purpose of prosecuting directors.
Health Safety and Environmental Law
Directors should be aware of:
Be aware that directors can, in certain circumstances in some jurisdictions, be
Individual directors who are found guilty of engaging in dishonest anti-competitive
Most jurisdictions have money laundering laws. Directors carrying out relevant financial business must:
A number of jurisdictions have legislation providing for the extradition of individuals.