When businesses and affairs of a company are under the direction of its board of directors, the directors stand in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf.

The Companies Bill, 2018 (the Bill) seeks to amend, consolidate and revise the law relating to companies, while reproducing substantially with some amendments the Companies Act 1963 (Act 179). Notable additions to the duties of directors are outlined by the Bill. The Bill indeed expands the duties of directors to include the duty to have regard to the likely consequence of any decision in the long term, the duty to have regard to the impact of the company’s operations on the community and the environment and the duty to have regard to the desirability of the company maintaining a reputation for high standards of business conduct.

The Bill provides in its section 199 civil liabilities for breach of duty by the directors. The Bill has not amended the provisions relating to civil liabilities for breach of director’s duty as set-forth by the Act 179 currently in force. However, the extension of the directors’ scope of duties subsequently strengthens their exposure to civil liabilities.