Duties of the director in accordance with the law of the Cayman islands | Law&Trust International

The director of the company in the Caymans plays a key role in the company's activities and is responsible for his decisions.

Therefore, we will briefly outline the main responsibilities imposed by the Cayman Islands legislation on the directors of local companies, and also describe the standards that the director must comply with in the proper discharge of his duties.

A number of decisions were made in the Cayman Islands that emphasized the basic principle that the director should act in good faith and in the interests of the company on whose board he is a member.

Cayman Islands courts usually follow the decisions of the courts of England and the Commonwealth when it comes to general principles of corporate law unless there are specific legislative differences.

It has long been established that the director bears both general legal and fiduciary obligations to the company on whose behalf he acts.

So, the main responsibilities of the director are as follows.

Directors acting and making decisions as a board of directors are required to:

  1. act in good faith in the best interests of the company;
  2. use the authority granted to them for their proper use; 
  3. apply all their skills and reasonable care, acting in the interests of the company.

If the director violates any of his general legal or fiduciary duties, the company may take measures to recover its property or to receive compensation from the director for the losses incurred.

In addition, it should be noted that the minority shareholder may sue the directors on behalf of the company if they use their powers either through fraudulent actions or carelessly with the intention of benefiting themselves.

The director should not put himself in a position where there is an actual or potential conflict between his personal interest and his duty to the company.

The director bears fiduciary obligations to the company in respect of which he acts, requiring compliance with the general standards of loyalty, integrity, and avoidance of conflict of duties and personal interests.

A conflict of interest arises when the director seeks to use the assets or capabilities of the company in his interests.

In practice, in most companies, the provisions of the articles stipulate that the contracts in which the director is interested are subject to enforcement if the director discloses his interests to the board of directors.

Concealment of profit

The fiduciary position of the director does not allow him to benefit personally from any opportunities arising from his position as director, even if he acts honestly and for the good of the company. This applies whether the profit is the result of a contract with a company or with a third party.

It should also be noted that the director cannot escape his obligation to account for personal profit by resigning before he receives it, and that is true even in cases when the company could not benefit from the contract, the director must still refuse the profit.

Director's responsibilities in the context of insolvency

When a company is faced with financial difficulties and is insolvent or has indefinite solvency, according to the laws of the Cayman Islands, directors must also take into account the interests of creditors. In the Cayman Islands and England, a law is in force according to which, in the event of insolvency or doubtful solvency of a company, its directors are required to keep its assets intact for creditors.

As you can see, the director has a rather serious responsibility, so you should carefully select a candidate for this position, as well as correctly register the charter of the company.

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