If you’re a company director, you have legal and ethical duties and some important tasks to attend to. If you’re new to leading and overseeing a company, start with understanding your role.
Being a good director can help your company run well, achieve its goals, and maintain a good reputation. As a company director, you have obligations to your company and shareholders, responsibilities under the Companies Act 1993, and obligations under an ethical code of conduct.
The Institute of Directors in New Zealand has a code of practice for directors and encourages company boards to adopt their own codes of conduct. Key principles in both the Companies Act and code of conduct are those of ‘good faith’ and ‘duty of care’. Put simply, directors should act sincerely and honestly, in the best interests of the company. Company directors’ duty of care is their responsibility to make financially, ethically, and legally sound decisions, that consider all the information available and are in the company’s best interests.
If you’re a director, make sure you’re up to speed on both company law and the accepted code of behaviour required for the job. If you ignore the underlying principles of good faith and duty of care you could be fined up to $200,000 or face jail time.
Remember to:
- Maintain a consistently solid understanding of the company’s activities and financial status.
- Confidently read, understand, question, and manage the company’s financial statements.
- Stay curious and use your independent judgement when dealing with company matters.
- Utilise reports, statements, and expert help to make decisions in the best interest of the company and know when to ask for more information.
- Consider joining the Institute of Directors to develop your skills and knowledge, learn from more experienced directors, and access helpful information and services.
- Use your advisors (accountants and lawyers) who keep up to date or are often aware of best practice in these areas.
