Duties and obligations of directors

 At the close of each financial year, the board must draw up an inventory of the various assets and liabilities existing at that date. It must also draw up the general operating account, the profit and loss account and the balance sheet, together with a written report on the situation of the company and its activities during the past financial year.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The Act requires every company to keep written financial records that accurately record and explain the company’s transactions, financial position and performance, and enable true and fair financial statements to be prepared and (in some circumstances) audited.  Companies must also prepare a number of reports each year, including (for most companies) a financial report and directors’ report.  Failure to comply with financial record-keeping and reporting requirements can result in civil penalties for the directors, or criminal penalties if the contravention is dishonest.

The Act requires directors of certain companies to prepare and file annual accounts and submit other information to ASIC.  Proprietary companies are categorised as either 'large proprietary companies' or 'small proprietary companies' and their reporting obligations differ.  The test is applied annually and takes into account consolidated revenue, value of consolidated gross assets and the number of employees.

Directors can also face personal liability under a range of statutes, including those relating to taxation, superannuation, workplace health and safety, environmental protection and competition laws.

The Act requires directors to prepare and file annual accounts and submit other information to the companies register.  The accounts and other information must be submitted to the companies register within nine months after the end of the previous financial year.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The directors are responsible, both individually and collectively, to shareholders for achieving the company's objectives and purposes. They shall be primarily concerned with the interests of the company, which take precedence over any other interests, including the interests of individual shareholders they may represent. The Board represents all shareholders, and must safeguard and promote the interests of the company and maximize its value.

In general, directors are responsible for ensuring that the company complies with its statutory and legal obligations, for example under company law, environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In addition, the directors must comply with, amongst others, the following duties:

• Convening a general shareholders’ meeting within two months, and preparing of a special report, if the company’s financial position meets certain negative exact criteria (the so-called “alarm bell procedure”).
• In case of a distribution of dividends in a private limited liability company, the management organ needs to determine that the company will still be able to pay its debts when they become due over a period of at least twelve months (liquidity test).
• Preparing of all legally prescribed reports (e.g. in case of capital increase, issuance of convertible bonds or subscription rights, cancellation or limitation of the preferential subscription right, issuance/abolition of categories of shares or profit certificates or changing its rights, setting up of the authorized capital, the dissolution of the company, conversion of the company).
• Preparing of all proposals and legal reporting in case of a corporate restructuring of the company (i.e. (cross-border) merger, (partial) demerger, contribution of a branch or a universality).
• Ensuring the timely establishment and filing of the annual accounts with the National Bank of Belgium, and take care of all other filings that need to occur in the Annexes to the Belgian State Gazette and the Crossroads Bank for Enterprises.

The Act requires directors to keep proper accounting records. This is done by:

• Correctly recording and explaining the transactions of the company.
• Ensuring that at any time the financial position of the company will be determined with reasonable accuracy.
• Preparing financial statements that comply with the Act.
• Enabling the financial statements of the company to be readily and properly audited.

Ethical duties of directors include:

• Disclosing any conflict of interests.
• Avoiding illegal transactions.
• Abiding by competition laws.
• Abiding by environmental protection laws.
• Engaging in social corporate responsibility.
• Accounting for any monetary gain (other than remuneration).
• Acting as trustee and giving over collections on company's behalf.
• Acting honesty and in good faith and in the best interests of the company.; and
• Not to make use of the company's confidential information.

Directors appointed by a shareholders' group have the same duties towards the company and other shareholders as the remaining directors. They are not able to infringe their duties to them in order to defend the interests of the shareholders' group that elected them.

Additionally, the Corporations Act sets out a list of conducts or activities that are forbidden for directors (prohibiciones).

Directors are obliged to file for insolvency without undue delay after learning or having reasonable cause to learn of the company's insolvency. If the executives do not file an insolvency petition in time, they are personally liable to the creditors for the damage or other harm caused by the breach of this obligation.

Directors must take all necessary measures in order to avert imminent insolvency. If they fail to meet this obligation, then in the event of a declaration of bankruptcy of the company, the court may decide, on the proposal of the insolvency administrator or creditor, that the director in question is personally liable for the fulfilment of the company's obligations.

Bookkeeping, financial position and capital reserves

The board of directors must ensure that the bookkeeping and financial reporting procedures are satisfactory, taking due account of the size and circumstances of the company.

The board of directors must also ensure that adequate risk management is established and that the financial resources of the company are adequate at all times, and that the company has sufficient liquidity to meet its current and future liabilities as they fall due. The board of directors must therefore receive on a continuous basis adequate reporting about the company’s financial position and ensure that the existing capital resources are adequate.

If it has been established that the company’s total equity represents less than half of the subscribed nominal share capital, the board of directors and the executive board must ensure that a general meeting is held within six months. At the general meeting, the board of directors must report on the financial position of the company and, if necessary, propose measures that should be taken, including a proposal to dissolve the company.

Yearly assessment of the beneficial owners, annual report and annual general meeting

At the time of incorporation, the information on the beneficial owners of the company must be registered in the Danish Public Register of Shareholders, and such information can be accessed through the Central Business Register's Website: : CVR.dk. Any changes to this publicly available information must be updated, when required. However, a company is also obligated to assess at least once a year whether any changes to the registered information on legal and beneficial owners have occurred and ensure that the registered information is accurate and up-to date. The result of the assessment must be disclosed at the board meeting where the directors approve the annual report.

The Danish Financial Statements Act prescribes that the board of directors must present the annual report at the annual general meeting for the shareholders' approval, and that the members of the board of directors must sign the annual report.

The board of directors is also responsible for convening and organizing the annual general meeting in due time for the general meeting to approve and submit the annual report so that the Danish Business Authority receives the annual report within six months after the end of the financial year.

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about beneficial owners.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In addition to day-to-day management, French law requires the President of the SAS (or other person as provided by the bylaws) to prepare and file annual accounts and submit all required information to the competent Trade and Companies Registry, including information about the company's ultimate beneficial owner. The accounts and other information must be submitted to the Trade and Companies Registry within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

See What are the key duties of directors?

Directors’ other obligations include:

• To sign and deliver annual returns for registration with the Registrar of Companies, in the form prescribed by Act 992.
• To prepare and send copies of financial statements and reports of directors and auditors of the company to every member and debenture holder of the company.
• Generally, to ensure that the company is well managed and complies with all its legal obligations.

Below is a non-exhaustive list of key statutory duties that a director of a company is required to comply with under the Companies Ordinance (CO):

• File return of allotments.
• Keep proper books of account.
• Lay before the company at its annual general meeting a profit and loss account and the group accounts.
• Procure that the financial statements of the company are approved by the board of directors and signed on behalf of the board by two of the directors of the company.
• Take reasonable steps to secure compliance with the CO’s requirements in respect of the preparation and content of the directors’ report.
• Make disclosure if any proposed resolution affects the interests of any director differently from the interests of any other shareholders.
• File annual returns with the Companies Registrar.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The director(s) must, among other things:

• File the annual accounts (financial statements) of the company with the relevant authority (following the approval of such accounts by the general meeting).
• Ensure that the data indicated in the company register is up to date (e.g. signatories, company address, registered share capital.
• Convene the general meeting if they become aware that:
  • The company’s shareholders equity fell below half (kft)/ two-thirds (zrt) of the registered share capital due to losses (sectoral legislation may set higher limits).
  • The company is threatened by insolvency or has stopped making payments or its assets do not cover its liabilities.

Directors must not acquire any shareholding in a business association -except for listed companies- and must not be directors in a business association whose main activity is the same as that of the company in which they are a director; however, the foregoing are default rules of the Hungarian Civil Code, so the articles of association may diverge from these. Further, within fifteen days of accepting their appointment, directors must notify any other company in which they are a director or a supervisory board member of such appointment.

Directors also must not enter into any transactions in their own name and/or on their own behalf falling within the main activity of the company except for usual transactions in the scope of everyday dealings (corporate opportunities); the foregoing are default rules of the Civil Code, so the articles of association may diverge from these.

The Company Law requires the BOD to:

• Prepare the annual work plan and budget.
• Prepare the annual report and financial documents of the company. The BOD must arrange for the financial statement of the company to be audited by a public accountant if:
  • the company’s business is to collect and/or manage public funds
  • the company issues debt instruments to the public
  • the company is a listed company
  • the company is a persero company (ie a state owned enterprise)
  • the company has assets and/or business turnover of at least IDR50 billion, or
  • if required by the regulations.
• Prepare and maintain the shareholders register and special register.
• Prepare minutes of the general meeting of shareholders, and minutes of the meeting of the BOD.
• Maintain all registers, minutes and financial documents and other documents of the company.

The directors must also observe and comply with the articles of association which may set out the required corporate approvals to be obtained before a company may conduct a certain corporate action.

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders and beneficial ownership.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

OHADA company law requires directors to prepare and file annual returns and submit other information to the company’s registry, including information about major shareholders.

Directors are also responsible for ensuring that the company complies with other statutory and legal obligations including environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Under the Italian Civil Code and other legislation, directors have the duty to adopt all measures necessary to preserve and guarantee the health and safety of employees. These measures include: to make an assessment of hazards for employees; to implement a programme of preventative activities; to reduce or, where possible, to eliminate hazards; and to monitor sanitary conditions of employees.

Directors must also adopt and efficiently implement an organizational and management model which is adequate to prevent the commission of crimes. If such a model is not adopted, and efficiently implemented, the company may be held liable for crimes committed by its directors or employees.

In case of financial imbalance, directors must also operate a "solvency test" before proceeding with a legitimate repayment of shareholders’ loans.

The duty to establish internal control systems

Directors of a "’Large Company"’ are obliged to establish and maintain internal control under the Companies Act.  A "Large Company" is generally defined as a company which has: stated capital in the most recent balance sheet of JPY500 million or more; or total liabilities in the most recent balance sheet of JPY20 billion or more.

The internal control system shall include, among others, the following items:

• Distribution of compliance manuals and training concerning internal rules.
• Maintaining records of the status of the execution of business so as to enable inspection by a third party, and thereby preventing any violations of law or administrative orders.
• Properly disciplining any employee who violates the law and building a spirit of compliance within the company.

Directors have additional duties to adhere to sector specific laws that apply to their market of operation. Generally, other key obligations of directors include, to:

• Keep a register of members, directors, directors’ residential addresses, beneficial owners, debenture holders and charges.
• Keep copies of documents such as the directors’ contracts of service or memorandum of terms; all resolutions of members passed otherwise than at general meetings; minutes of all proceedings of general meetings; and all documents creating charges.
• Keep its records in hard copy or electronic form or arrange them in an appropriate and efficient manner to enable future access. Where the records are kept in electronic form, such records must be capable of being reproduced in hard copy form.
• Keep proper accounting records. Accounting records are considered to be proper if they, among others, show and explain the transactions of the company, disclose the financial position of the company and comply with financial accounting standards. The accounting records must be kept at the company’s registered office and open at all times to inspection by the officers of the company. In addition, the accounting records must be preserved for a period of not less than seven years from the date on which they were created.
• Prepare and file annual returns, annual accounts and submit other information to the registrar of companies within the prescribed time limits.
• Ensure compliance with other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The main other key obligations of the managers are to:

• Prepare each year an inventory indicating the value of all the company’s movable and immovable assets and all the debts it owes and is owed, with an annex summarising all the commitments and debts of the company’s officers, managers and statutory auditors, if any.
• Prepare the annual accounts (balance sheet, profit and loss account and annex).
• Establish a report on the company’s business, if required.
• Submit the annual accounts, the consolidated accounts (if required by law), the management report and the report of the person responsible for auditing the company (if any) to the general meeting of shareholders for approval, within six months after the end of the financial year.
• File the approved annual accounts, the management report and the report drawn up by the statutory auditor(s) (if any) with the RCS within one month following their approval by the annual general meeting of shareholders, and no later than seven months after the end of the financial year.

The Companies Act requires directors to, inter alia, keep proper accounting records and make such records available for inspection. The accounting records must be preserved for a period of not less than seven years from the date on which they were created.

The board of directors cannot approve certain transactions under the Companies Act unless the directors are satisfied that, upon the transaction being effected, the company is likely to satisfy its solvency test. Such transactions include:

• authorising a distribution;
• acquiring or redeeming the company’s own shares;
• giving financial assistance for the purpose of acquiring the company’s own shares;
• reducing its stated capital.

Directors must also ensure that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Directors must carry out all their obligations established in the bylaws of the company, specifically (i) to take care of the business as if the director is one of the owners (cuidar del negocio como si fuera propio); (ii) the duty of loyalty, and (iii) duty of care or diligence.

Regarding the duty of loyalty, generally all directors should:

• maintain the confidentiality of the company’s information;
• avoid conflicts of interest;
• if having conflicts of interest, disclose such situation to the disinterested directors or the decision-makers;
• ensure that the company´s interests prevail over their own personal interests in any decision-making as directors or managers;
• comply with the agreed policies for the approval of transactions with related persons;
• refrain from using insider information for their own benefit;
• use the assets of the company or of the controlled entities only pursuant to the approved guidelines, causing no damage or loss to the company (or the controlled entities); and
• not benefit from a business opportunity targeted at the company or the controlled entities, causing them any harm.

Regarding the duty of care or diligence, all directors must act in good faith and in the best interests of the company (and its the controlled entities) and are expected to:

• require timely, true and sufficient information about the company and the controlled entities, as they deem necessary for reasonable decision-making;
• exercise the duty of inquiry by monitoring those to whom they delegate the ongoing operation of the business;
• delay any resolution to be adopted by the board of directors when a member has not been called to the boards’ meeting or when the board of directors itself is not completely informed about the matters to be discussed.

There are several reporting requirements to the Trade Registry, for example the following must be filed:

• Approval of the annual accounts.
• Financial statements.
• Management reports.
• Auditors' reports on the financial statements.

The financial statements must also be filed with the tax authorities no later than three months after the end of the financial year.

The director has a duty to report on the exercise of their management function and in relation to the company’s accounts must:

• prepare and submit to the competent corporate bodies the management report, the accounts for the fiscal year in question and other accounting documents required by law;
• ensure that the management report and accounts for the financial year in question are signed by all directors. Directors who refuse to sign the report and accounts must, even if they have already ceased to be directors of the company, justify their refusal in such documents and explain it to the competent corporate body responsible for approving such documents;
• ensure that the management report and the accounts for the financial year are prepared and signed by the company´s directors in office at the time of the presentation. (Former directors must provide all information requested for such purpose, regarding the period in which they were in office); and
• save if otherwise provided by law, ensure that the management report and the accountability documents are presented and assessed within the first 4 months immediately following the end of each financial year.

Aside from the common law fiduciary duties and duty to act with care, skill and diligence, the Companies Act also prescribes various other duties of directors, mainly relating to the administration of the company.  These are numerous, but it is worth mentioning a few:

• Directors must ensure that the prescribed detail is contained on all stationery and negotiable instruments of the company. 
• Directors must call general meetings if one has been requisitioned by members. 
• Directors and officers must ensure that copies of special resolutions are embodied in and annexed to every copy of the articles issued after the resolutions has been registered and that a copy is sent to any member who has requested one and paid the prescribed fee. 
• Directors are responsible for taking all reasonable steps to secure compliance by the company with the requirement to keep the necessary accounting records.  
• Directors must also take all reasonable steps to ensure that annual financial statements are made out and laid before the annual general meeting of the company. 
• Finally, directors must ensure that all statutory registers are kept. 

The following duties, in general, can be regarded as other key obligations of the board:

• Managing the day-to-day operations of the company, subject to possible limitations in the articles of association.
• Setting out and executing company strategy and policies.
• Achieving company aims.
• Responsibility for drawing up and publishing annual report and accounts.
• Keeping the company's books and accounts.
• Monitoring the risks, solvency and liquidity of the company.
• Ensuring the company's compliance with relevant legislation and regulations.
• Responsibility for the company's financing.
• Ensuring that other company bodies function well.
• Representing the company.

Duties of the board can be expanded or limited through the articles of association.

The Act requires directors to file annual returns, prepare and file annual accounts if the company is “large” and submit other information to the New Zealand Companies Office, including details of changes to the shareholders, directors and constitution of the company. The annual return, annual accounts and other information must be submitted to the New Zealand Companies Office within the time limits prescribed by the Act. It is also the responsibility of the directors to maintain and keep the share register of the company up to date.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental, health and safety and building laws, tax laws, employment laws, consumer protection laws, competition laws, overseas investment laws and bribery/anti-corruption laws.

Nigerian law requires directors to prepare and file annual returns, financial statements and other corporate information to the corporate affairs commission within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The directors must fulfil their obligations with the company’s best interest in mind, and not abuse their position in the company. Abuse would include the following:

• Members of the board of directors may not adopt any measure which may tend to give certain shareholders or others an unreasonable benefit at the expense of other shareholders or the company.
• The directors and general manager may not comply with any resolution of the general meeting or another company body if the resolution is contrary to statutory law or the company’s articles of association.

Directors must:

• Prepare the annual report, the financial statements and the proposal for the distribution of profits, if any, to be submitted to the shareholders' meeting.
• Prepare reports on the advisability of capitalising loans for a capital increase.
• Convene general shareholders' meetings.
• Inform the shareholders, if they so request, with reports or clarifications they deem necessary regarding the matters included in an agenda for a shareholders' meeting.
• Approve any merger or spin-off project.

These are duties to:

• Report changes in company’s data disclosed in the National Court Register. As a rule, this should be done within seven days after a relevant change has occurred.
• Report changes in the Central Register of Beneficial Owners. As a rule, this should be done within seven days after a relevant change has occurred. Relevant filings should be made by sending an electronic form which should be signed with a qualified electronic signature within the meaning of EU Regulation No 910/2014 (eIDAS Regulation) by one of the management board members in accordance with company’s rules of representation.
• Ensure that the company complies with its other statutory and legal obligations. For instance, this covers requirements under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The directors are responsible for preparing the annual reports and accounts and other financial statements required by law in respect of each financial year, and must submit them to the general meeting of shareholders and supervisory board, within three months from the end of each financial year, or within five months for companies that submit consolidated accounts or that use the equity method.

The directors are also responsible of preparing and submitting a proposal for the allocation of profits and/or handling of losses to the shareholders, in respect of each financial year.

Other obligations may include matters which are assigned to directors in the memorandum of association of an LLC and may vary according to how responsibility of managing the LLC is apportioned by the shareholders. They may include general company obligations such as maintaining records or calling annual general meetings.

• Duty of loyalty/ confidentiality. Directors not only have the right but also the duty to manage the company in compliance with the high standards set out for a prudent and diligent competent director in the best interest of the company.

Directors have a general duty of loyalty towards the company and must exercise their powers in an honest and faithful manner. Directors cannot act in their own interest to the detriment of the company.

Company Law also provides that directors of JSCs must not divulge confidential information and business secrets of the company, both during and after the expiry of their mandate. While not expressly provided by the Company Law, this duty should apply by analogy in case of directors of LLCs, on the basis of their general duty of loyalty.

• Avoiding conflicts of interests. The Company Law provides specific rules as regards the directors' conflicts of interest but only in case of JSCs. Thus, any director who, directly or indirectly, has interests contrary to the interests of the company in a certain operation, must inform the other directors and the censors or internal auditors about it and refrain from participating in any deliberations on the operation in question.

The director is under the same obligations if they are aware that their spouse, relatives or kindred up to the fourth degree included have an interest in a certain operation.

While not specifically provided by the Company Law as regards LLCs directors, the loyalty obligation should also imply that the director of a LLC informs the shareholder(s) in case of a conflict of interest and abstains from taking a decision.

In any event, the Civil Code provides, as a general rule, for any type of company, that the director having a personal interest in a matter must inform about it the company and refrain from participating in any deliberations on the operation in question.

• Non-competition with the business. According to the Company Law, unless authorised by the shareholders, a director cannot be a director in competing companies or in companies having the same business object, nor exercise the same trade or other competing trade, on the director's own account or on account of others, under the penalty of being dismissed and held liable for damages.

Other obligations may include matters which are assigned to directors in the articles of association of an LLC and may vary according to how responsibility of managing the LLC is apportioned by the shareholders. This may include general company obligations such as maintaining records or calling annual general meetings.

The director is responsible for convening the general meetings of shareholders (ordinary or extraordinary).

For the annual ordinary general meeting, the director must prepare the management report. The director also sends to the shareholders 15 days before the meeting the financial statements for the financial year, the management report, the text of the proposed resolutions and, if any, the general report of the auditor together with any special report of the auditor relating to the agreements between the company and a manager or partner.

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders.  The accounts and other information must be filed with the ACRA within the prescribed time limits. The directors are also required to lay financial statements before the shareholders in the company’s annual general meeting

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In general, directors must take all necessary measures in order to prevent insolvency.

Directors are obliged to file a petition for bankruptcy within 30 days of the moment they learned or could have learned of the company's insolvency while maintaining professional care. If the director does not file a petition for bankruptcy in time, they are obliged to pay to the company a penalty in the amount of EUR12,500.

A breach of this obligation to file a petition for bankruptcy in time is also punishable under the Slovak Criminal Code.

The South African Companies Act requires directors to prepare and file annual accounts and submit other information to the Companies and Intellectual Property Commission.  The accounts and other information must be submitted to the Companies and Intellectual Property Commission within the prescribed time limits.

A director, alternate director, prescribed officer and member of committee or board (collectively directors) must not:

• Use their position or any information obtained while acting as a director to either gain an advantage for themselves or for another person other than the company or knowingly cause harm to the company, by hindering the company’s commercial opportunities.
• Exceed the company’s powers.
• Make a secret profit.
• Conclude a transaction or acquire an opportunity which was in fact a transaction or an opportunity that was available to the company, unless a full disclosure is made to and consent is obtained from the other directors.
• Breach their duty of care, skill and diligence, by putting their interests above those of the company or by acting negligently. The test for determining negligence is an objective one, as it compares the conduct of the director to that of a reasonable director’s conduct.
• If such director has or knows that a related person has a personal financial interest in a transaction or proposed transaction with the company, or in a matter to be considered by the board of directors at a board meeting, the director must not participate in the consideration of the matter, except to the extent of the disclosure or execute any document on behalf of the company in relation to the matter, unless specifically requested to do so.
• Knowingly (an actual knowledge or where the director ought reasonably have known or have investigated further):
  • act in the name of the company, sign on behalf of the company or authorise action by or on behalf of the company without authority
  • act or fail to act with the intention to defraud a creditor, employee or shareholder of the company, or for any other fraudulent purpose.
• Acquiesce in carrying out the company business despite knowing (or where the director ought reasonably to have known and fails to investigate further) that such actions constitute reckless trading.
• Be present at a relevant meeting or participate in the making of a decision by round robin and fail to vote against any of the following actions (to the extent the director knew the relevant action was inconsistent with the South African Companies Act or the company's memorandum of incorporation):
  • Issue of unauthorised shares or securities.
  • Grant of options over unauthorised shares.
  • Provision of unlawful financial assistance to any person for the acquisition of securities of the company.
  • Provision of unlawful financial assistance to a director, to the extent that the resolution or agreement has been declared void.
  • Approval of an unlawful distribution.
  • Unlawful acquisition by the company of any of its shares, or the shares of its holding company.
  • An unlawful allotment by the company, to the extent that the allotment or the acceptance of it is declared void.

Among other obligations laid out by the Spanish Companies Act, the directors must call the general shareholders’ meeting, draw up the annual accounts and file them with the Commercial Registry. They also shall, if necessary, apply for a declaration of insolvency.

The board of directors shall ensure that:

• The annual report is prepared and filed at the Swedish Companies Registration Office within the prescribed time limits.
• A share register is maintained, stored and made available in accordance with the Swedish Companies Act.
• A meeting of the board of directors be convened when requested by a board member or the managing director. The chair of the board (if any) shall ensure that meetings are held when necessary. There are no statutory requirements for a certain number of board meetings. In practice, at least one inaugural board meeting is held in connection with the annual shareholders' meeting. However, the company's articles of association may contain requirements for the number of board meetings that must be held annually.
• An annual shareholders' meeting be held within the prescribed time limits.
• The company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The CA requires directors to prepare, lay in a general meeting, and file annual accounts and submit other information to the Companies Registrar, including information about significant shareholders.  The accounts and other information must be submitted to the Companies Registrar within the prescribed time limits.

If these requirements are not complied with before the end of the period allowed for laying and delivering accounts and reports, every person who immediately before the end of that period was a director of the company, is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.

Further, if the directors of the company fail to make good the default within fourteen days after the service of a notice on them requiring compliance, the court may on the application of any member of creditor of the company or of the Companies Registrar, make an order directing the directors (or any of them) to make good the default within such time as may be specified in the order.  The court's order may also provide that all costs of and incidental to the application shall be borne by the directors.

It is a defence for a person charged with such offence to prove that they took all reasonable steps for securing that those requirements would be complied with before the end of that period. It is not a defence to prove that the documents in question were not in fact prepared as required.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In addition to the general obligations of managers, a manager has two main obligations:

• the administrative, accounting, fiscal and financial management of the company, and
• the obligation to inform the shareholders about the financial and legal situation of the company.

Therefore, the manager must ensure the annual filing of accounts at the registry, that proper accounting records are kept and that an auditor is appointed (if required).

The manager is also responsible for making available to the shareholders the legal and accounting documents of the company. They are also obliged before each general assembly, whether it is an ordinary or an extraordinary general assembly, to put at the disposal of the shareholders certain documents such as the reports.

In the event that the company is experiencing economic difficulties, or is bankrupt, the law provides that in the case of limited liability companies, the manager must notify the commission for the monitoring of economic enterprises of the precursory signs of economic difficulties experienced by the company and which, if they persist, are likely to lead to the cessation of payments.

The notification must also be made by the shareholder or shareholders holding at least 5% of the capital of the company experiencing economic difficulties.

Every private company is required to file an annual return (with a balance sheet and auditors’ report annexed) within 42 days from the annual general meeting of the year, containing information about past and present members, its directors, secretary and its shareholding. The law also requires registration of particular resolutions and agreements within 30 days after their passing such as special resolutions.

Directors have the following additional administrative obligations:

• To cause minutes of all proceedings of general meetings and directors’ meetings to be entered in the company books.
• To avail the company books for inspection by any member upon request.
• To keep proper books of accounts which must be open to inspection by the directors.
• To prepare a report with respect to the state of the company’s affairs and the amounts recommended to be paid by way of dividend or to be carried to reserves.

In case of non-compliance with any of these obligations, each director may be held personally liable to pay the default fine or to imprisonment depending on the nature of the non-compliance and whether or not it is committed wilfully.

In group structures, directors of a company with subsidiaries are required to lay group accounts dealing with the state of affairs and profit or loss of the company and the subsidiaries before the company in a general meeting. However, this obligation does not apply where the company is a wholly owned subsidiary of another domestic company.

Directors also have the general duty of ensuring statutory compliance by the company.

Onshore UAE

Other obligations may include matters which are assigned to directors in the memorandum of association of an LLC and may vary according to how responsibility of managing the LLC is apportioned by the shareholders. This may include general company obligations such as maintaining records or calling annual general meetings.

Dubai International Financial Centre

The DIFC Companies Law requires directors to cause annual accounts to be prepared in relation to each financial year of the company.

Unless otherwise provided in the articles of association, the directors of a private company must also submit copies of the annual accounts to the shareholders together with an auditor's report, and file these with the DIFC within 30 days after circulation to the shareholders if:

• annual turnover exceeds USD5,000,000 calculated on a consolidated basis including all subsidiaries; and
• the company has more than 20 shareholders for the whole of that year.

The directors of a private company shall within 6 months after the end of the financial year, or earlier, appoint an auditor to hold office from such date until the end of the next period for appointing auditors.

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The board generally oversees and manages the business and affairs of the company and must approve certain fundamental actions, such as appointing or removing the company’s executive officers, amending the company’s charter documents, approving the issuance of stock, or approving a sale of the company. Certain fundamental transactions may also require the approval of the company’s stockholders under the Delaware General Corporation Law or the company’s charter. As part of its duty to remain informed, a board would ordinarily require management to present regular reports regarding material aspects of the company’s business, including its financial results. In the event the company is in or nearing insolvency, directors may be personally liable for actions or inactions the company takes. For example, if the company is unable to pay taxes to taxing authorities or wages to employees, the director may face personal liability.

The Companies Act provides that the board of directors shall cause accounting records to be kept that correctly record and explain the transactions of the company, enable the financial position of the company to be determined with reasonable accuracy and enable financial statements of the company to be readily and properly audited.

In addition the board of directors are required to ensure that, within three months following the end of the financial year, an audit is conducted, and the report of the financial affairs is signed by not less than two directors or, where the company has only one director, by the director. The board of directors are required to also prepare an annual report on the affairs of the company during the accounting period ending on that date. Lastly the Companies Act provides that a company is required, within ninety days after the end of each financial year, to lodge with the Registrar an annual return in the prescribed form.

Companies are not exempt from complying with the law, therefore directors must ensure that their operations and business complies with the relevant laws of the Republic of Zambia.

The Act requires that directors ensure that the company complies with its other statutory and legal obligations, for example under exchange control laws, export and import laws, environmental laws, health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The Act also requires that the directors ensure that the accounts and other information are kept up to date and are submitted within the prescribed time limits.