Directors, as already observed, occupy a key position in the management and administration of a company. Their duties are usually regulated by the Articles of the company. There are some statutory duties of the directors. These statutory duties have been discussed at appropriate places. Again, there are certain duties of a general nature. They may be classified as:

• Fiduciary duties
• Duties of care, skill and diligence
• Other duties

Fiduciary Duties

• They must exercise their powers honestly and for the purpose for which they were conferred and bona fide for the benefit of the company as a whole. They must act honestly and for the benefit of the company they represent. If they do that, they discharge both their equitable as well as their legal duty to the company.
• As fiduciaries, they must not place themselves in a position in which there is a conflict between their duties to the company and their personal interests.
• The fiduciary duties of directors are owed to the company and not to the individual share holders. They must not therefore make a secret profit out of their position. If they do so, they shall have to account for it to the company.

Duties Of Care, Skill & Diligence

• Directors should carry out their duties with reasonable care. Further they are expected to exercise such degree of skill and diligence as is reasonably expected from persons of their knowledge and status. The standard of care, skill and diligence depends upon the nature of the company's business and circumstances of the case. There are various standards of care depending upon:
  • The type and nature of work;
  • Division of power between directors and other officers;
  • General usages and customs in that type of business; and
  • Whether directors work gratuitously or remuneratively.
• Directors must exercise the degree of skill which may reasonably be expected of a person of their knowledge and experience. But -
  • They are not liable for errors of judgment;
  • They are not bound to give continuous attention to the company's affairs; and
  • They may properly entrust duties to some officials of the company and in the absence of grounds for suspicion, they are justified in trusting those officials.
• Apart from these duties, there are numerous provisions of the Companies Act which is the duty of the directors to carry out.
• If a director is negligent in the performance of his duties and the company suffers any damage, he must compensate the company for the loss.

Other Duties

• To attend Board Meetings
• Not to delegate his functions except to the extent authorised by the Act or the constitution of the company
• To disclose his interest
• To determine the amount of minimum subscription
• To see that all money received from applicants for shares is deposited in a scheduled bank until it is returned to the applicants under Section 69 or until the certificate to commence business is obtained
• To prepare a statutory report and file a copy of it with the Registrar
• To forward a copy of the statutory report to every member of the company at least 21 days before the date on which the statutory meeting is held
• To call an Extraordinary General Meeting of the company on the requisition of the specified number of members
• To approve the balance sheet and profit and loss account before they are submitted to the auditors for their report
• To prepare and place at the Annual General Meeting an annual report of the company along with the balance sheet and profit and loss account
• To pay dividends only out of divisible profits of the company
• To manage the affairs of the company efficiently.