A director's duties are the legal architecture of the office. They define what the director must do, what the director must not do, and what happens when the director gets it wrong. The duties are not the whole of the job — the craft extends beyond what the law requires — but the duties are the floor. A director who falls through the floor finds that what looked like a part-time non-executive role has become a personal liability and a professional crisis.
Three duties that recur across jurisdictions
Duty of care. The director must act with the care, diligence, and skill that a reasonably competent person would exercise in that role. The standard is objective — trying hard is not enough. And it has a subjective overlay: if you are a former CFO, you are held to a higher standard on financial matters than a director without that background. Your expertise is not a shield; it is a heightened obligation.
Duty of loyalty. The director must act in good faith, in the interests of the company. No self-dealing. No secret profits. Conflicts of interest must be disclosed and managed. The duty runs to the company as a legal person — not directly to shareholders in most jurisdictions.
Duty of obedience. The director must act within the powers conferred by the articles and the law, and for proper purposes. A board cannot issue shares to dilute an activist simply because it believes dilution serves the company's interest — that is an improper purpose.
What happens when it goes wrong
The consequences are personal:
The real protection
D&O insurance covers defence costs and most civil settlements. It does not cover fraud, wilful misconduct, or criminal penalties.
The director's best protection is the discipline of the office: informed decision-making, proper process, documented deliberation, and the willingness to dissent when the room is heading somewhere the director cannot follow. A well-documented board minute showing that the director asked the right questions is worth more than any insurance policy.
"I was not told" is not a defence in any jurisdiction. "I asked the questions a reasonable director would have asked" might be. There is a substantial gap between the two.
This article is adapted from The Director's Craft by Peter Burchardt. Read the full chapter in the book →