Protection against liability

Directors should:

• Act in all circumstances in the interest of the company. Directors must, regardless of the method of appointment, consider themselves as the representative of all shareholders.
• Be fully aware of their rights and obligations. They must, in particular, be familiar with and comply with the legal and regulatory provisions relating to their position, the applicable codes and good governance practices, as well as the rules specific to the company resulting from its bylaws and the internal regulations of its Board.
• Preserve their independence of judgment, decision and action in all circumstances. Directors must refrain from being influenced by any element alien to the company's interests, which they must defend at all times. Directors must alert the Board to any factor of which they are aware that may affect the company's interests.
• Remain independent. A director cannot be granted an employment contract by the company after their appointment. Directors must clearly express their questions, opinions and positions, and even their opposition. In the event of disagreement, they must ensure that these are explicitly recorded in the minutes of the deliberations.
• Avoid any conflict between their moral and material interests and those of the company. Directors must inform the Board of any conflict of interest in which they may be involved and must not contract with the company except in limited circumstances (see Transactions with the company). If directors cannot avoid finding themselves in a conflict of interest, they must abstain from participating in the debates and in any decision on the matters concerned. Directors must act in good faith in all circumstances and not take any initiative that could harm the interests of the company.
• Maintain discretion with regard to information that is confidential or considered to be confidential. A director personally undertakes to respect the total confidentiality of the information they receive, the discussions in which they participate and the decisions taken. They must also refrain from using for their personal profit or for the profit of anyone else the privileged information to which they have access.
• Devote the necessary time and attention to their duties. They should ensure that the burden of their duties as a director leaves them sufficient time to devote to those duties, particularly if the director also holds executive functions. A director should inform themselves about the company's business and specificities, its challenges and its values, including by interviewing its main managers. They should also attend meetings of the board of directors and any specialised committees of which they are a member assiduously and diligently, and attend shareholders' meetings. Directors should endeavour to obtain, within the appropriate timeframe, the information they deem essential for their deliberations within the Board in full knowledge of the facts. A director should also endeavour to update the knowledge that is useful and necessary for the proper performance of their duties.
• Contribute to the collegiality and efficiency of the work of the board and any specialised committees that may be formed within it. Directors should make all recommendations aimed at improving the functioning of the Board and accept the evaluation of their own actions within the Board. They should also ensure that the Board's guidance and control functions are carried out effectively and without hindrance, that procedures for monitoring compliance with laws and regulations are in place (in letter and in spirit) within the company and that the positions adopted by the Board are, without exception, the subject of formal decisions, properly reasoned and transcribed in the minutes of its meetings.

• Delegate those tasks that cannot be performed due to skill or time constraints.

• Seek advice. Directors should take decisions on the basis of knowledge and experience. Therefore, it is important for directors to seek advice, especially from relevant staff and external consultants.

• Obtain a directors' liability insurance policy.

• Keep informed about the affairs of the company, particularly its financial position.  Directors should ensure they have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make proper disclosure of outside positions or interests which may give rise to a conflict of interest or duty and/or if they have (or a family member or other associate has) a personal interest in any proposed or existing transaction or arrangement with the company.
• Ensure comprehensive minutes are taken, including recording the decisions made and the key information and factors that the directors took into account when making such decisions.  Directors should ensure they have considered all available options and carefully analysed their respective merits and cost. This may extend to documenting any alternative options that the board has considered in making those decisions and the reasons why particular options were preferred or discounted.
• Seek professional advice from lawyers, accountants and other advisors as necessary, in a timely manner.
• Maintain awareness of, and compliance with, any group-wide governance and compliance policies.  These may cover areas such as environmental protection, workplace health and safety, ethics, bribery/anti-corruption, competition law and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.  Directors should also continue to monitor legal developments and ensure that policies and protocols are updated to remain current in light of any legal, regulatory or other relevant changes.
• In corporate groups, the director's primary duty is to the company on whose board they serve, not the holding company or other group companies.  The Act permits the directors of a wholly-owned subsidiary to act in the best interests of the holding company if the subsidiary's constitution expressly authorises the directors to do so and the other conditions set out in the Act are satisfied.  However, this does not permit the subsidiary's directors to act as puppets, disregard their other duties or disregard the interests of the subsidiary's creditors.  Where the wholly-owned subsidiary is dependent on parental support to remain solvent, the director should also ensure that this support is ongoing and is documented appropriately.
• Seek the protection of an indemnity, insurance and access deed and ensure that there is appropriate D&O insurance cover in place to protect directors and officers.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the other directors and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Where a director finds themselves in a position where they are uncomfortable with a course of action being proposed by a fellow officer, their objections should be recorded in writing either by a letter addressed to the other officer, or evidenced in the minutes of the relevant meeting.

Directors should:

• Keep themselves informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for, and regularly attend, board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the other directors at the board meeting if they have a conflicting interest in any proposed or existing transaction or arrangement with the company.
• Keep records – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that.
• Take advice – directors should take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with these can often help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• In the case of a group situation, it should be kept in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Perform all their statutory and constitutional obligations with the reasonable skill, diligence, care and good faith required of them. This is the core duty of directors, because this applies to every decision which the directors take, whether they are pressing on the margins of their powers under the constitution or not.
• Not place themselves in a position in which there is a conflict between their duties to the company and their personal interest or duties to others.
• Not abuse their powers; directors must not accept any benefit (from a third party) which is conferred because of the power they have as a director or by way of reward for any exercise of their powers as director.
• Permit individual or minority shareholders, subject to appropriate safeguards, direct access to the court in order to bring an action on behalf of the company against the wrongdoer.
• Keep appropriate records of all meetings by of way minutes and resolutions made. Further, ensure that the records of the company’s dealings for audit and statutory accounting purposes.

The Chilean Corporations Act recognises the business judgement rule, meaning that directors must act in compliance with the requirements established by law and other applicable rules, in good faith, in the interests of the company and must be duly informed. They are not required to be all the times successful in the business that they manage, but they will be held responsible if they breach their duties.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions.  This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies.  These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up-to-date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and / or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Ensure they do not participate in discussions, or vote on matters, which they have a conflicting interest.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, to the extent allowed by law, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted or there are minority shareholders).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up-to-date financial information, prepare thoroughly for and regularly attend board or other relevant governance body meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the President if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of the relevant governance body proceedings are made reflecting the reasoning behind key decisions. Minutes should also record any disagreement amongst the relevant governance body and the reasons for that. In addition, legal representatives should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.
• Especially in the context of the Covid-19 pandemic:
  • customers and suppliers – engage with trading partners and keep lines of communication open. While all parties' interests may not be aligned, all share the common goal on maximising the chances of their business surviving; and
  • employees’ health and safety – make sure that the health and safety of those employees who cannot work remotely is ensured, by complying with governmental recommendations.

The following steps can be recommended:

• Proper information about any internal restrictions imposed on the managing director in the company's articles of association, by shareholder resolutions or in the managing director's service agreement.
• Setting up a specific reporting system for social contribution payments, tax and proper accounting and preparation of financial statements.
• Thorough documentation of any business decision and contract entered into with third parties. For difficult business decisions, the managing director should seek prior shareholder approval.
• Establishment of an early financial crisis warning system.
• Where more than one managing director has been appointed, the shareholders' meeting should allocate specific fields of responsibility.
• The shareholders of a company regularly resolve upon the formal approval of the management (Entlastung) after the end of each business year. Such formal approval serves as a waiver of any claims which were identifiable at the time of the resolution.
• Also, the company may explicitly waive any claims, recognizable or not, against its managing director (Generalbereinigung).

However, such waivers or underlying shareholders' resolutions do not exclude the managing directors liability if the infringed duties relate to capital maintenance rules, the interests of the company’s creditors (most particularly, in an insolvency situation) or any other third party (e.g. tax authorities).

• Due care and skill. To avoid liability, a director must act with the requisite due care and skill by following due process in their activities and act in a manner that a faithful, diligent and ordinarily skilled director would act in the circumstances.
• Full disclosure. Directors must also make full disclosure in situations where a conflict of interest may arise in transactions or contracts in respect of which a director may be interested. This also applies generally to situations where the personal interests of the director may come into conflict with that of the company. Full disclosure of material facts enables the company to understand the scope of conflict of interests that may arise and informs the decision to consent to the director’s involvement in such a transaction where possible.
• Due diligence. Generally, directors should be knowledgeable in the business of the company and well informed about any transaction, contract or business decision to be taken. Where necessary, they should obtain relevant advice for any aspect of transactions that they are unfamiliar with. 
• Legal compliance. Directors should be aware of their legal obligations in relation to the company, whether statutory or by agreement with the company and endeavour to comply with them. Where there are any uncertainties, they must seek clarification from the company or obtain legal or other professional advice to ensure that they do not inadvertently breach their obligations.

Directors should:

• Make explicit disclosure to third parties when acting on behalf of the company to avoid incurring personal liability under contracts.
• Devote sufficient time and attention to the affairs of the company and should act with caution when they suspect that the company may be, or may become, insolvent, or that a particular decision may cast doubt on a company’s prospects of solvency in the future. Under any such circumstances, the directors should immediately requisition a board meeting to acquaint all directors with the suspicion. The board should seek professional advice to determine whether any remedial measures are required or possible, and if remedial measures are not possible, the directors should ensure the company ceases to trade to guard against contravening any provisions against fraudulent trading.
• Attend training. Newly appointed directors should attend training on the first occasion of their appointment and subsequent professional development training as necessary to ensure that they have a proper understanding of the business of the company as well as their responsibilities under the statutes and common law and applicable legal/regulatory requirements pertinent to the business of the company.
• Keep proper records. Directors must ensure that accurate minutes of meetings are kept in respect of any significant corporate decisions. The minutes of such meetings should include clear records of reasons for the approving or objecting to any resolutions proposed. Note that even when a director is absent from a board meeting, that director is still responsible for the decisions that are duly made in the meeting.
• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep in mind that they are always expected to act in the interest of the company and in line with the articles of association and the resolutions of the general meeting.
• Keep in mind that they are expected to act independently/autonomously, i.e. except for sole shareholder companies, no shareholders (including majority shareholders) have the right to instruct the directors.
• Avoid conflict of interest situations and if this is not possible, act transparently in that regard (e.g. by informing the general meeting).
• If the financial position of the company becomes fragile, particularly if the company is threatened by insolvency, take legal advice in order to avoid liability for wrongful trading (as detailed in the point concerning Liabilities on insolvency).
• Treat the shareholders equally, in a non-discriminatory manner, including if they request information on the operation of the company.

As Indonesia is not a common law jurisdiction, there is no set of case law that sets out the yardstick or guiding notes on the practical steps that the directors can take to prove that they have discharged their duties.

The directors must perform their duties in good faith, prudently and with a sense of responsibility. They shall also observe the articles of association of company and the Company Law (especially those provisions regarding corporate approvals for companies to enter into certain corporate actions) and other laws and regulations applicable to the company.

As noted previously, a director will not be liable for the company’s losses if the following conditions are met:

• The losses were not caused by their mistakes or negligence.
• They managed the company in good faith and prudently in the interests and in accordance with the purposes and objectives of the company.
• There were no conflicts of interest, either directly or indirectly, in their management acts that resulted in the losses.
• They took action to prevent the losses from occurring and continuing.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions.  This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies.  These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions.  This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of and comply with any group-wide governance policies.  These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• In a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Adopt an organizational, administrative and accounting structure adequate for the nature and size of the company and to promptly detect a situation of crisis and the loss of the company's going concern status as well as to take action without delay to adopt and implement those instruments provided by the regulations to overcome the state of crisis and restore the company's going concern.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.

• 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.

• Also in a group situation, keep in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Under Italian law, parent companies or entities which, carrying out direction and coordination activities of companies, act in their own entrepreneurial interest or in the interest of another in violation of principles of correct corporate and entrepreneurial management of such companies, are directly liable vis à vis the shareholders of the same companies, for the prejudice caused to profitability, and to the value of the shares, as well as vis à vis the creditors of such companies for the damage caused to the integrity of the net equity. There is no liability when overall there is no damage  as a consequence of the overall direction and coordination activity, or when the damage has been totally eliminated through deliberate transactions.

In this context, Italian law imposes, on the directors of the directed companies an obligation to comply with certain disclosure requirements; failure to comply with such obligations may result in liability for the damage that the lack of knowledge may have caused to shareholders or third parties, who were unaware of the relationship between controlling and controlled companies. Italian law also provides for the liability of the parent company, and of any other subject that has participated in the activity – including the directors, for damages caused to the quotaholders and the creditors of the parent company if such “activity of direction and coordination” is being conducted improperly.

Directors should:

• Report any matters that might have significant impact on the company to the board of directors and seek advice/opinions from other directors before making decision.
• Ensure the discussion regarding decisions is duly recorded in the minutes of board of directors.
• Keep any record or material supporting the decision as evidence.  

To avoid liability, directors should:

• Attend and participate in meetings and decision making. Directors exercise their powers through resolutions typically passed at meetings. Consistent attendance at meetings is therefore critical. This is especially important as directors are bound by decisions made at meetings in which they did not participate. Technological developments facilitating attendance by electronic means makes it easier for directors to attend meetings.
• Act in the best interest of the company especially where they are appointed to represent specific constituencies such as significant shareholders and with due care and skill.
• Keep themselves informed about the affairs of the company, particularly its financial position and grant access to up-to-date financial information. Directors should prepare thoroughly for meetings and familiarise themselves with matters affecting the business.
• Effectively manage conflict by making full disclosure to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records.  Directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that.
• Take independent professional advice.  Directors should ensure that returns and accounts are filed promptly and take independent professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Engage a competent company secretary to ensure full and timely compliance with all statutory and regulatory obligations.

Managers should:

• Keep track of the affairs of the company, particularly its financial position. Managers should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the Board and shareholders if they have other positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – managers should ensure that full written records of Board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the Board and the reasons for that. In addition, managers should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help managers (and employees) fulfil their duties and obligations and minimise the risk of liability.

• Act in the best interest of the company with due care and skill.
• Attend and participate in meetings and decision making. Directors exercise their powers through resolutions typically passed at meetings. Consistent attendance at meetings is therefore critical. This is especially important as directors are bound by decisions made at meetings in which they did not participate. Technological developments facilitating attendance by electronic means makes it easier for directors to attend meetings.
• Keep themselves informed about the affairs of the company, particularly its financial position and obtain access to up-to-date financial information. Directors should prepare thoroughly for meetings and familiarise themselves with matters affecting the business.
• Effectively manage conflicts by making full disclosure to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records.  Directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that.
• Take independent professional advice.  Directors should ensure that returns and accounts are filed promptly and take independent professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Engage a competent company secretary to ensure full and timely compliance with all statutory and regulatory obligations.

They should ensure that each major decision is approved in writing by the shareholders/partners and that they comply at all times with their duties – namely, the duty of diligence, the duty to act in good faith, the duty of loyalty and the duty to take care of the business as if they were one of the owners.

D&O insurance cannot be acquired to protect a director for breach of the duty of loyalty. By law, such insurance coverage is forbidden in the case of publicly traded companies and other financial entities regulated and supervised by Mexican financial services agencies.

As stated in How can the directors be protected from liability? the delegation of authority, unlike a delegation of signature, can exempt directors from liability.

However, the validity of delegations of authority requires certain conditions to be met:

• the delegation must be necessary and justified in view of the company's organization
• the delegate must have the capacity, authority and means to exercise this delegation, and
• the delegation must be written, precise (specific to an area of intervention of the law), and accepted by the delegate.

In addition to the actions described in “How can directors be protected from liability?”, directors must ensure that they act with due diligence as a thoughtful and coordinated manager, acting always in line with the company´s, shareholders´, employees´ and creditors´ interests, as well as exercising their duties as fiduciary directors for all shareholders regardless of who appointed them as director and the shareholding held by any one shareholder in the company.

It is important that directors have a clear knowledge of their obligations and duties, which includes knowledge of the main legal provisions applicable to them and to the company. Also, directors must be aware of, and comply with, any group-wide governance policies. These may cover areas such health and safety, ethics, bribery/anti-corruption, anti-money laundering and human rights, designed to help them to fulfil their obligations/duties and minimize the risk of liability.

Thus, directors should:

• Stay informed about the affairs of the company, particularly its financial position and compliance obligations. Ensure that they have access to updated financial information, prepare thoroughly for and regularly attend Board meetings and familiarize themselves with key legislation affecting the business.
• Make full disclosure of any related party interest they have in any transaction with the company.
• Ensure that all resolutions are diligently recorded in the minutes and that such resolutions are duly backed up with sufficient information to show the reasoning behind their decisions.
• Ensure that any vote against a specific resolution is duly recorded in the minutes with the justification for such opposition.
• Make sure that any resolution on any matter that is either outside their personal expertise or should be subject to an expert’s opinion is not taken without such expert opinion having been obtained.
• Implement, and comply with, policies designed to protect the company, its shareholders, and employees, from corrupt practices, money laundering and financing of terrorism practices.
• Implement, and comply with, policies addressing health, safety & environmental issues, ethics policies, and any other policy that can help minimize liability risks for them and for the company.

The overarching responsibility of directors is to act in good faith in the best interest of the company. Directors will normally not be held liable for mere mistakes, as long as they act with the necessary care, skill and diligence, in good faith and in the best interest of the company.

Directors should:

• Remain up to date on and keep each other informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered.  Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies.  These may cover areas such as health and safety, ethics, anti-bribery/corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should do all of the following:

• Understand the business and exercise financial literacy. Understanding the business is fundamental. Directors must ensure they have sufficient familiarity with the business operators to supervise management. A core role is to regularly monitor the financial performance of the business and forecasts and so the ability to read and understand financial statements is a key piece of a director's artillery. This is particularly important where the company may be approaching insolvency, as directors are required to address how they can continue to protect creditors of the company if there is substantial risk of serious loss or where there is doubt to whether obligations incurred by the company can be honored.
• Keep informed about the affairs of the company, particularly its working capital and financial position. Directors should have access to up-to-date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Insist on a strong corporate governance framework. A number of statutory obligations have express or implicit process-based defences and many of the prominent director liability cases feature obvious corporate governance failings. In circumstances where misconduct is alleged, the courts will inevitably look to the processes surrounding the directors' decision-making.
• Keep proper records. Directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Resolutions should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants. Directors should read minutes taken and ensure they are correct. They should consider whether the record indicates any inconsistency in decision-making. A good question for directors to ask themselves is whether the minutes are sufficiently detailed so as to assist if ever they're asked to give evidence.
• Take professional advice. Obtaining professional advice regularly and ensuring that all such advice is understood and, where necessary, acted upon can be a director's lifeline. Certain areas of directors' obligations are technical and will require specialist external advice, particularly in relation to understanding what is necessary for a director to discharge their duties and especially on matters of solvency. In some cases, reliance on professional advice will provide a potential defence to liability (for example, for disclosure breaches under New Zealand's financial markets legislation). In other cases, advice may be too generalised or vague to provide a defence. In all cases, however, directors should not abdicate their own judgement.  
• Communicate. Communicating with shareholders, financiers and key stakeholders (including government bodies and regulators) can both assist with discharging duties and also mitigate risk by allowing views to be cross-checked and problems identified early. For example, early engagement with financiers on solvency concerns should always be promoted.
• Ensure that they are aware of, and comply with, the terms of any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.

To avoid  liability, directors should:

• Ensure that the company’s articles provide for indemnification, that they have entered into an appropriate indemnification agreement with the company, and that there is sufficient D&O insurance in place.
• Perform their duties conscientiously, and act in the best interest of the company. They must also ensure that they are aware of, understand, and comply with the company’s governance and compliance structures.
• Keep informed about the affairs of the company ensure that they have access to up-to-date financial information. They shouldn’t hesitate to ask management questions to enable them to have a better understanding of the company’s business.
• Devote ample time to the company, attend board meetings regularly and prepared sufficiently for them. They must also ensure that the meetings are well documented. The minutes should include key information such as the factors the directors took into consideration when making such decisions. A director that disagrees with a majority vote must ensure that their dissent is formally and accurately recorded.
• Make full disclosures to the board and shareholders regarding conflicts of interest.
• Understand their fiduciary and legal duties to the company, undertake professional development as a director, and seek professional advice from lawyers, and other advisers when necessary.

Directors should:

• Make sure they fully understand the resolution they are voting for or against, especially what the consequences may be and how the resolution may affect the company’s financial situation and shareholders. If the director does not fully understand, the director should seek further information to clarify the situation.
• Keep records. The directors should ensure that written records of board proceedings are kept, and make them as detailed as possible, including the reasons for the decisions that were taken, whether any alternatives were considered, and also any disagreement amongst the board members and the reasons for that.
• Act in the best interest of the company on which board they serve, and not necessarily in the interest of a group of companies. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g., when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.
• Monitor the financial situation of the company, and immediately prepare a balance sheet for liquidation purposes where there is reason to believe the shareholders' equity or liquidity is less than adequate. If the balance sheet evidences that the shareholders' equity is not adequate, the board shall immediately take further actions (see What are the key general duties of directors?).
• Ensure that all transactions are made on arms' length terms.

The board of directors should play an active role in communicating the company's economic and financial information to shareholders.

From an organisational perspective, it is recommended that companies establish a Criminal Risk Prevention Mechanism applicable to the company's business activities, in order to prevent the commission of crimes in the company's operations, and to mitigate the risks associated with the potential criminal liability of the legal entity.

Management board members should:

• Keep informed about the affairs of the company, particularly its financial position. Management board members should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – management board members should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, management board members should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help management board members (and employees) fulfil their duties and obligations and minimise the risk of liability.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position, and compliance obligations. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Directors must act, not only with diligence, but also with loyalty, keeping in mind that they must act always in the interest of the company, taking into account the long-term interests of the shareholders and considering the interests of other subjects relevant to the sustainability of the company, such as its workers, customers and creditors.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

To mitigate the risks of any liability, directors should:

• Act in accordance with the LLC's constitution.
• Avoid conflicts of interest and to the extent this is not possible, to declare conflicts of interests.
• Refrain from participating in any work that is in competition with the activities carried out by the LLC unless with the approval of the shareholders.
• Refrain from using information they obtain through their role as a director for their own benefit or for the benefit of their family members.
• Refrain from disclosing information about the company where the veracity of that information is questionable.
• Convene a general assembly where the losses of the LLC reach half of its issued share capital.
• Refrain from signing cheques on behalf of the LLC where there is a possibility that funds on account may not be sufficient.

Please see How can directors be protected from liability? for considerations related to the possibility of contractually limiting liability and liability insurance.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.

To avoid liability, directors must manage the company and act in all circumstances on behalf of and in the interest of the company.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, the company’s constitution and any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with these is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Additionally, in a group situation, directors should keep in mind that they must act in the best interest of the company.  Whilst group interests and the company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Directors should perform their duties in compliance with the Slovak Commercial Code and other applicable regulations (such as tax regulations, labour law regulations, regulations concerning health and safety, ethics, bribery/anti-corruption, etc.).

A director, alternate director, prescribed officer or member of a committee will be deemed to have discharged the duty to act in the best interests of the company and with a degree of care, skill and diligence, if the director, prescribed officer or committee member:

• Takes reasonably diligent steps to become informed about the matter.
• Either has no material personal financial interest in the subject matter or has disclosed such personal financial interest to the board or shareholders.
• Made a decision, or supported the decision of a committee or a board, with regard to the subject matter.
• Had a rational basis for believing, and did believe, that the decision was in the best interests of the company.

Directors should keep informed about the affairs of the company, particularly its financial position. In this regard, directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.

They should also make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company. In addition, they should also keep records and ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position and ensure that the company's taxes are duly paid. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.

• Keep records and take advice – directors should ensure that board meeting minutes are prepared, which preferably setting out a full record of the board proceedings and the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that the company's annual report is filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.

• Be aware of, and compliant with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.

• In a group situation, keep in mind that directors must act in the best interest of their company as the interests of a corporate group are not recognized as such. Whilst the interests of a corporate group and the interests of an individual company in the corporate group are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

• Monitor the financial situation of the company, and immediately prepare a balance sheet for liquidation purposes where there is reason to believe the shareholders' equity is less than one-half of the registered share capital. If the balance sheet evidences that the shareholders' equity is less than one-half of the registered share capital, the board shall immediately take further actions, see What are the key general duties of directors?.
• Ensure that all transactions are made on arms' lengths terms.

Directors should:

• Make sure they know what their duties are – many companies arrange training for their boards and provide directors with guidance notes.
• Ensure regular board meetings happen, attend all board meetings wherever reasonably possible and make themselves aware of the day to day business of the board of directors - including functions which have not been specifically delegated to those directors.
• Make reasonable enquiries into the nature of any documents they are asked to sign and any business to be transacted at a board meeting so as to ensure that they can make an informed decision in deciding how to vote.
• Where a director has the ability to delegate, ensure that any delegate (e.g. a committee, a specific director or any other employee) is competent and trustworthy and ensure the director remains informed as to the activities which the delegate is carrying out.
• Ensure that all formalities are observed, in particular that all meetings are properly minuted and all transactions properly documented.
• Where a director objects to a course of action which is nevertheless approved by the majority of directors, the director should note their objection in writing to the board of directors and try to ensure that such objection is noted in the minutes of the relevant board meeting.

In relation to group companies:

• Adopt a group structure with clarity as to its overall purpose, supported by board minutes. Work out the appropriate role of parents in the affairs of group companies across the full range of the group’s business activities, create and adopt (at individual corporate level) appropriate procedures and police/stick to those procedures.
• Maintain separate governance and operation of each group company, including regular board meetings and minutes, operation of separate bank accounts.
• Consider the most appropriate composition of the board of directors of each company and if there is overlap ensure that directors treat each company they are directors of as a separate legal person.
• Make sure that the way each group company contracts with third parties and its stationery, web sites, email footers and other correspondence does not cause confusion as to the entity third parties are dealing with.
• Make sure that employees and other representatives of the company similarly are clear as to the relevant corporate entity they are representing.
• Make sure that the relevant transfer pricing legislation and guidelines are followed in intergroup agreement/contracts.
• Seek relevant legal and other professional advice. The closer the company gets to financial difficulties the more important it is for the board to be seen to have taken suitable independent advice.
• Have awareness of, and compliance with, any group-wide governance policies and relevant jurisdiction legislations or request that such policies be put in place.  These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.

Managers should:

• Perform their duties with diligence and care, and act in the manner that a faithful, loyal and competent manager would act in the same circumstances.
• Be acutely aware of their legal obligations to the company. In case of uncertainty, they should contact the company for more information.
• Consider seeking professional advice and assistance (e.g. from legal counsel and legal advisors) when making important decisions in areas outside their personal expertise and knowledge.
• Avoid delegating powers as much as possible and if powers are delegated, make sure that the delegated person is capable of fulfilling the tasks that are in their charge.
• Act not only with diligence, but also with loyalty, so that everyone in the company can work as a harmonious team to accomplish their aims in the sole interest of the company and ensure its sustainability.

Directors should take the following measures to avoid liability:

• Keep and maintain updated records of board and company meetings and of all company information.
• Ensure prompt filing of necessary company documents.
• Retain professional advisers for decisions that may require expert advice or skill such as law and accounting.
• Stay informed on all company affairs including its financial position, major transactions and any obligations arising from newly enacted or amended laws.
• Harmonise director and company positions and relationships.
• Make full disclosure of any interest in proposed or existing transactions or arrangements with the company.
• Comply with any group-wide governance policies.

Onshore UAE

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.

Dubai International Financial Centre

Directors should:

• Keep informed about the affairs of the company, particularly its financial position.  Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.

Directors should:

• Keep informed about the affairs of the company, particularly its financial position. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
• Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and / or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
• Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered.    Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Also in a group situation, keep in mind that directors must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (eg when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

To avoid liability, directors should:

• Ensure that the company’s charter documents provide for exculpation and indemnification for directors.
• Ensure that the director has an appropriate indemnification agreement with the company.
• Ensure that the company has obtained sufficient D&O insurance.
• Conscientiously and faithfully perform their duties as a director, including by asking questions of management, thoroughly understanding the company’s compliance program and policies and acting in good faith and with loyalty to the company and its stockholders.
• Hire and retain skilled and effective management who deliver strong results for the company.
• Thoroughly document meetings of the board and the director's appropriate oversight of the company.
• Make robust and accurate disclosures regarding conflicts of interests and transaction details and alternatives to the company’s stockholders.
• Adopt procedural safeguards in the event of a conflicted or other high-risk transaction, such as by requiring a stockholder vote and/or a vote of a special committee of non-conflicted directors for transactions with directors.
• Obtain and rely on expert advice as to complicated matters (such as financial advisors on valuation, IT consultants on data breach remediation, or legal advisors on complicated questions of law).

Additionally, specific practical steps should be taken in certain circumstances, such as ensuring true and complete disclosure is set forth in securities filings, following up on red flags that may indicate misconduct, creating special procedures for corporate transactions, and considering creditors as the company approaches insolvency.

• Ensure that the company maintains accounting records in accordance with its legal obligations.
• Ensure that the management of a company verifies information given by officers and employees of the company.
• Obtain professional advice in order to make informed decisions about matters which affect the company.
• Obtain proper advice in respect of the primary legislation that applies to the activities of the company and the obligations that are imposed by the legislation on both the company and you as a director.
• Ensure that proper procedures exist and are followed in order to minimise the risk of the company breaching any of its liabilities to minimise the risk that you become vicariously liable.
• Ensure that all actions taken by the directors are properly approved.
• Consider obtaining directors’ liability insurance.
• In an event that a person is acting as a nominee director, obtain a deed of indemnity from the appointing shareholders.

Directors should:

• Stay well informed about the affairs of the company, in particular the company’s financial position. This will mean looking at the accounting books of the company and ensuring that the company is acting within the bounds of the law.
• Ensure that they have made full disclosures to their company about any interests they have, that could result in there being a conflict of interest.
• Ensure that they keep records and take advice from individuals who have expertise in certain matters. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts are filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
• Comply with corporate governance policies like the Zim Code. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights.  Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
• Further, in a group situation, directors should keep in mind that they must act in the best interest of their group company.  Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted). It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.