Directors’ Future to Promote the Success of the Company

 

 Introduction

 With the United Kingdom exiting European Union, it is a vital period to deliberate on open-minded decision-making, against the background that, primary benefits of being an EU member about UK company regulation was the incorporation of laws which would see to it that those regulations would protect the interests of numerous companies across the nation. Section 172 forces directors to act in a manner that is beneficial to the entire company. Thus, the directors are obligated to protect the interests of the entire company. Also, the government has been carried out evaluations to see that all company directors adhere to the rule of law and follow all the details about section 172. In the case study, the director defendants were supposed to protect SML’s interest hence the shareholders were not responsible for dealing with legal matters pertained to SML. The function of the director is to protect company assets from being transferred or translocated during a transaction.

The Issue and argument

 Stubbins Marketing Ltd V Stubbins Food partnership’s judge dwelled on the duomatic concept: a company director’s illegal actions are permissible as long as the shareholders are informed of the decision. The judge insisted that full disclosure gives the director legal right to perform his designated duties to the company as he deems fit. On the other hand, the shareholders have to be given enough time and space to comprehend the director’s decisions before implementation. Based on this argument, the director defendants are right because the shareholders had a right to protect SML’s interests.

 The director defendants failed to prevent SML’s assets from being moved and reorganized during a certain transaction. Consequently, the director defendants are shifting the blame to shareholders. On the other hand, the shareholders are arguing that SML is a legal entity hence the legal obligation to prevent the restructuring of the assets lies with the director’s office. Hence during the transaction, the director defendants did not stop the structuring.

Principles for Supporting the Framework

 According to the details contained in section 172 of the companies, directors must perform their responsibilities in a manner that shows good faith to the company. As a result, directors should consider the consequences of their decisions will have on the entire company. For example, a director has to consider the impact his decisions will have on staff members and business relationships the company enjoys with other people such as clients, suppliers among other people [1]. Hence, it is beneficial if a decision is deemed to be beneficial to everybody within the company. If the decision is not done in good faith, then, it will have a ripple effect on the people of the entire company. It is vital to note that if a corporation is bankrupt, the role of the director is to evaluate company creditors and act in a manner that favors the creditors rather than shareholders of the company. Due to the extensive operations directors carry out on a day to day basis, shortly, their duties will be evaluated through the performance of the entire company. The board must evaluate directors before any person can fill the directorial position [2]. Presently, the directors have to tackle issues such as business strategy, procedures, medication, and safety and also see to it that the business is sustained in the future to come. Thus, there is much at stake when it comes to directors. The chance to come to terms with the duties of directors to oversee more critical and step projects makes them liable to numerous things that might occur in the future.

 Essentially, international company interruption and present indecision has proven that directors and board members are components that determine a lot of things when it comes to insulating companies from hard times and promoting the evolution of adaptable and effective companies which in the long-run serve the aim of human societies. In this particular context, the duty of the director's defendants was to safeguard the interests of SML Company, however, they failed. Hence, the director should be held accountable for the failure to protect the interests of SML. Also, the role of the directors does not allow them to pass the blame to the shareholders or the board members [3]. Simply put, the director is the beginning and the end of it all. Besides, SML had a right to safeguard its legal rights and see to it that more was done in terms of creating a separate entity and issuing a  warrant that would block third parties from accessing its transactional terms and conditions. More so, the directors should see to it that more is done regarding the protection of SML assets and systems. Notwithstanding, it is the new normal for directors to do everything possible to direct all their efforts toward the protection of the legal rights of a company.

Practically, the role of directors places them on a higher pedestal than they already were. This is because a director has to have the ability to steer companies through disasters while at the same time extenuating the hazards and comprehending mechanisms that will assist the company remain low in debt and stay afloat amidst tough economic times. The rising demand for good results has led to the optimization of companies and implementing changes that are flexible and beneficial to the company. The chance to have more than an event where one has to apply variation in skill and mannerisms, directors all over the globe have been forced to adapt to alterations in local and international market spaces coupled with the commitment to come to terms with more than one way of offering the chances that were never given to the company as time goes by within the market space.

Standard prerequisites for conducive administration, audit monitoring, compensation policies, company performance objectives, and successive primary leadership have persistently, shaped the role of directors all over the world. Nevertheless, in the current period, most companies have been forced to realize that a director's qualities are a mixture of specified and diversified skills and mannerisms which in turn generate effective business administration. Even though shareholders are at liberty to put their economic interests in the first place, most of the themes lean on the lucrative side [1]. However, a director is tied to his responsibilities and can be held accountable if he goes contrary to his obligation.  A board has to strategically guide a director's decision-making process and see to it that he does not in any way, he does not contradict the law and the interests of the entire company. Where the production seems to outpace the alterations, the directors are supposed to initiate an operation process that will be an interim and justify the operations of the entire company. These actions company has to be done in relation with other consultants and also issue a notice that would protect more than one aspect of the entire status. In the event.

Article 172 companies Act, 2006

 The directors of companies should conduct themselves in a way that facilitates the interest of the company. This way, the director is more likely to promote the overall performance of the company. In the meantime, people have to be more responsive to the entire company or organization [4]. Before making any decision, the director has to evaluate the impact of his decision before making it. The implication of a decision should be considered in terms of the long term effect on the company under which the decision is being made. Additionally, all the people working for the company have to be notified of the matter at hand so that they can be well informed of the decision and the effect it will have on them in the long run [3]. As time goes by people are redefining the director’s role in decision making due to the impact the director has on the entire company. Besides, the need of fostering good relationships with other people so that its collective obligation to the community can be realized and protected. This way, the brand image of the company is kept well and within safe hands. The company’s business operations affect the immediate communities and surrounding hence another reason for coming critically assessing a director’s decisions before he makes them. In the meantime, once a person is considered central to a certain area, the company’s desirability is at stake because the company has to protect its image to the market players.

Application of The Facts To The Argument

 Hong Kong director laws and regulations are not that much different from the ones in the United Kingdom. In Hong Kong directors play the same role in matters about promoting the entire company and ensuring that it remains afloat during hard economic times. Hong Kong requires private companies to have one or more directors. Supplementary directors are to occupy other positions for the sake of helping with matters concerning administration, a delegation of duties are to be divided this way so that the director can be held accountable for anything that happens during his tenure [5]. The director's nationality is not restricted to any nationality as long he is appropriately serving his duties. Also, the director has the authority to hold a meeting outside of Hong Kong. In this particular case, most of the directors are normally given the chance to take part in defending the company and protect their interests by doing so. In terms of the general obligations and accountabilities of directors, most companies are required to follow the Hong Kong constitution [6]. In case someone fails to adhere to the law, the director and his obligations to the company are to be held accountable due to civil and criminal law. Even though case regulations are framed to elaborate about director roles, they are sometimes inaccessible to the public. Hence the company is to objectively carry out its activities because most of the things are done based on the regulatory standards set by the government. This also implies that the director has a civil duty to obey the law of the land. Also, there is a guide that outlines how a director should carry themselves.

 Directors are advised to refer to supplementary information such as reviews of their obligation and directory regulations. For instance, the Hong Kong institution formulate and update frameworks for directors to operate under. Directors are also required to adhere to corporate governance policies that dictate how company activities are conducted daily. It is vital to note that an outline set aside to aim in controlling directorial conduct is important because it determines the level of commitment directors have towards the company [7]. Also, the guidelines are only meant to serve one purpose hence should be separated from constitutional law. In the guideline, the first duty a director has to the company is acting in good faith so that the company can have an advantage entirely. A company's director is supposed to make decisions with the welfares of the company at heart. This implies that the director is obliged by law to cater to the needs of the company and that of its shareholders. While performing the obligated duties, a director should consider the final result before making a decision. Moreover, any authority given to the director is supposed to be used for the good of the entire company hence as a director exercises his duty, he should keep in mind the goal is to meet the objectives of the entire company. Thus, whenever a director carries out duties, the aim is to do with proper cause or purpose [9]. The duties of the directors have to be in line with those of the interests and immediate aims of the company. Similarly, the director needs to ensure that he does things according to the stipulations of the law. For instance, the director has to make sure that all the things are done skillfully and the result is high quality and acceptable to the people. General information has to follow through with skilled and experienced personnel who are ready to protect the reputation of the company due to the reasonable manner in which things are done. Also, highly skilled people with well-known experience can ensure that all the functions are carried out in an accurate manner that meets the immediate objectives of the entire company. Whenever people are helped or come to terms with more than one way of doing things, the director is supposed to verify each one of them before settling on the best option that would see to it that everything is legally binding and follows the criteria set by the company. Simply put, each and every decision a director makes have to be governed by rules and policies put in place prior to decision making.

 Certain duties are given to the director. These duties are set aside to enhance performance and make sure that a company is diligently run. One of the duties given to the directors of companies is never to deal with transactions that they have an interest in as it is against the law [9]. A director has to put the company’s interests first and help in the facilitation of more than one given aspect. Hence, to give the company undivided attention has to be neutral in everything that he does over the long run. Therefore, the director’s interests have to be those of the company and this will give the company the chance to thrive. An obligation to promote the duties of a company have to do with financial and even civil.

A director's obligations are normally categorized into two sections- fiduciary and duty skills and upkeep. Even though Hong Kong regulations explain and in-depth discuss the most important parts of the company regulations, some of the regulations are intricate and need to interpret by lawyers. Taking a broader approach to the issue of inaccessibility to matters pertaining director's role to the company and the community has made it hard for most of the directors to be held accountable whenever they mess up or misuse their power [8].  The obligation or choice not to delegate matters has called for people to be more assertive and calm whenever the director makes a mistake because the law is availed to block any misdeeds. The chance given to directors is supposed to be for protecting and upholding company regulations and laws which in the long run safeguard community welfare and safety especially if the company derives its raw material from the nearby zones. More regions are acknowledging the fact that most directors make crucial decisions hence the need to evaluate the decisions through a third party that ensures most of the functions are assessed and challenged based on the court of law. This way, the director gets a chance to exercise authority in line with the constitution. At all times the director of a company should align his actions with the company directives and should only exercise authority under the stipulated jurisdiction. A person who occupies the director position has to make sure that he is acquainted with the constitutional stipulations and he is ready to as the constitution asserts. The contract which a lawyer sign is supposed to be binding to the company [8].  While determining the commitment of the director to the company is important, all the activities have to be verified by the board. This way, more than one person is responsible for issues that go on in the company hence in case of a breach of the law, more than one person takes note.  Consequently, the director does not have to check himself every time.

Conclusion

 The director of a company plays a legalistic and civic duty to the company.  Directors have to protect the interests of the company at all costs. Also, the workers and everybody that operates in the company have to be considered while making decisions.  The key aspect is fostering good relationships with other people who work with the company such as suppliers and even transporters. Also, a board can be put in place to vet potential directors before they can take the position.

 

References

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