Directors and officers may be personally liable to any party that has an interest in the affairs of the company. These parties may include shareholders, prospective shareholders, investors, employees, creditors, customers, suppliers, liquidators, and the revenue, regulators, the Government and competitors.
An officer may become liable for damages and legal costs and expenses in the event of breach of duty.
With liability well established and with increasing statutory duties and an increasingly litigious environment, the number of suits against Directors is increasing.
Who is an officer?
Officers are not limited to only company directors. Broadly speaking, an officer of a company is probably any employee or director of a company who is involved in corporate policy and decision making.
The duties of a director
Individual directors are required to exercise a reasonable degree of skill and diligence while discharging their mandate. The degree required may vary depending on the skills and experience reasonably expected of a person occupying the position of the officer and upon the circumstances of each case.
Circumstances which may give rise to a claim
Many circumstances may give rise to a dispute between a company officer and other parties including:
What gives rise to legal proceedings?
Legal proceedings against directors and officers usually arise following certain events:
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