Protection against liability

What practical steps can directors take to avoid 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.
  • 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, directors should keep in mind that thet 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.

Last modified 1 Mar 2021

  • 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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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 he has a director or by way of reward for any exercise of his 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.

Last modified 1 Mar 2021

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.

Last modified 5 Apr 2021

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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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).

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

Directors should:

  • Keep in mind that 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 Liabilities on insolvency);
  • Treat the shareholders equally, in a non-discriminatory manner, including if they request information on the operation of the company.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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 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.

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.

Last modified 8 Feb 2021

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.  

Last modified 8 Feb 2021

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 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 - 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 ensure that returns and accounts and 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.

Last modified 16 Jun 2021

Managers should:

  • Keep informed about 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 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 – 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 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 managers (and employees) fulfil their duties and obligations and minimise the risk of liability.

Last modified 8 Feb 2021

As a general rule, for decisions that a director is not in agreement with, note that directors who have not participated in the decision of the board, or who have voted against it and who have not taken part in its execution will not be liable for damages resulting from the same. For this purpose, they must have their dissenting vote recorded in the minutes, or they will be presumed to have voted in favor of the deliberation.

With regard to the general management duties, directors must ensure that they act with due diligence as a thoughtful and coordinated manager, acting always in line with the company's, shareholders' and employees' interests. For this, directors have to ensure they have a clear knowledge of their main obligations and, so, the company's obligations, which include knowledge of the main legal rules governing the company's business and the regular obligations related to the same that must be complied with. Also, directors must 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, designed to help fulfil duties and obligations and minimize the risk of liability.

Thus, directors should:

  • Stay 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.
  • 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 minimize the risk of liability.
  • 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.
  • Be aware that, in a group situation, additional obligations may arise to safeguard the group interest, thus directors must be informed and prepared to be aligned with the interest of the company and the group where relevant.

Last modified 19 Aug 2021

Directors should:

  • Keep each other and stay 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.

Last modified 8 Feb 2021

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.

Last modified 1 Mar 2021

Directors should:

  • Make sure they fully understand the resolution they are voting for or against, especially what the consequences will be and how the resolution will affect the company’s financial situation and shareholders. If the director does not fully understand, they should seek further information in order 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 (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.
  • 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' lengths terms.

Last modified 16 Jun 2021

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.

Last modified 26 Jul 2021

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 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 management board members (and employees) fulfil their duties and obligations and minimise the risk of liability.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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

Last modified 8 Feb 2021

To avoid liability, the Director and BoD members should:

  • Keep the participants of the company informed of the affairs of the company, its financial position and its compliance with the mandatory provisions of Russian legislation.
  • Disclose to the Company information on transactions representing a conflict of interest.
  • Obtain the approval of the participants of the company for a transaction when necessary under the law or the company's charter.
  • Comply with the internal rules and procedures for entering into transactions.
  • Obtain sufficient information that is common to business practices in similar circumstances before entering into any transaction.
  • Check the reliability of the company's contractors, etc.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

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.

Last modified 19 Apr 2021

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.

Last modified 8 Feb 2021

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 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. 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.
  • 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.

Last modified 8 Feb 2021

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, he or she 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.

Last modified 1 Mar 2021

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.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

To avoid liability, directors should:

  • Ensure that the company’s charter documents provide for indemnification and limitation of liability 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.
  • Thoroughly document meetings of the board.
  • 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
  • Obtaining and relying 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 corporate transactions or in the event of insolvency.

Last modified 8 Feb 2021

To avoid liability and prevent risks the directors should:

  • Be informed of all director’s rights and duties prescribed under the charter, the company’s regulations and Ukrainian legislation, receive prior corporate approvals where necessary.
  • Submit all required information to the state authorities, act within the contractual and legislative framework with the counterparties etc.
  • Know up to date information about the affairs of the company, particularly its financial position, prepare thoroughly for and regularly attend shareholders’ and supervisory board meetings and get familiarised with key legislation affecting the business.
  • Make full disclosures to the supervisory board and shareholders in case of existing or anticipated conflicts of interest.
  • Keep records of all decisions taken, voting procedures, signed contracts and agreements, comply with legislative requirements on the retention of documents.
  • Timely address all the risks, requests, conflicts both inside and outside the company and any other important issues with the general meeting of shareholders and/or supervisory board.
  • Take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants. Act in good faith and reasonably within the company’s best interests.

Last modified 8 Feb 2021

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.

Last modified 19 Apr 2021

Angola

Angola

What type of company is typically used in group structures?

In Angola, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

Angola

Angola

What is a "director"?

There is no complete definition of the term "director" in Angolan law.  Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director.

What are the different types of director?

Directors validly appointed as such, through a shareholders' resolution, may be executive or non-executive.

The executive directors are responsible for the management of the affairs of the company.

The non-executive directors are responsible for the general supervision of the performance of executive directors’ duties.

Last modified 1 Mar 2021

Angola

Angola

Who can be a director?

A director must be at least 18 years old.  In the event of a legal person being appointed as a director, it must appoint an individual to exercise the office in their own name. The legal person must share liability with the person appointed by it.

Foreign directors must hold a work visa, ordinary visa or residency card.

Minimum / maximum number of directors

Under Angolan law there is no maximum number of directors. The company’s articles of association may, however, specify a greater minimum number and/or specify a maximum.

The management of private limited companies is carried out by a board of directors, composed of an odd number of members.

It may be agreed in the articles of association that the management shall be exercised by one single director when:

  • The number of shareholders is only two (which can only happen in cases where the State, public companies or entities legally equivalent to the State hold the majority of the share capital).
  • The share capital does not exceed an amount equivalent, in national currency, to USD50,000.00.

Last modified 1 Mar 2021

Angola

Angola

How are directors appointed?

Directors must be appointed by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A resolution appointing a director must be filed at the company’s registry office.

Directors must be appointed for the period fixed in company’s bylaws, which must not exceed four calendar years with re-appointment being permitted.

How are directors removed?

Any member of the board of directors may be dismissed (either with cause, or without cause) at any time by means of a resolution approved by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A director may also resign at any time through the issuance of a resignation letter addressed to the Chairman of the board of directors, or in case of the resignation of the Chairman, to the company’s audit board or audit committee.

The resignation or the resolution on director’s dismissal must be filed at the commercial registry.

Last modified 1 Mar 2021

Angola

Angola

Typical management structure

Typically, the management of private limited companies is carried out by a board of directors and supervision by a supervisory board, made up of an odd number of members, elected by shareholders at a general meeting.

One of the directors is appointed as Chairman of the board of directors.

How are decisions made by directors?

The manner in which directors can make decisions is set out in the company's bylaws.  In private companies limited by shares, the bylaws typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telematic means (provided that the company ensures the authenticity of declarations and the security of communications, registering the content of all interventions) or an unanimous written resolution.

Directors must meet at least once a month, unless otherwise provided in company’s bylaws.

The validity of the resolutions of the board of directors depends on the presence of the majority of its members.

In relation to the minimum quorum, the board of directors must not approve resolutions without the absolute majority of votes of the directors present.

Authority and powers

The board of directors has exclusive and full powers to represent the company.

The powers of representation of the board of directors are performed jointly by the directors.

Acts performed by the directors, on behalf of the company and in the use of the powers conferred upon them by law, shall bind the company before third parties, irrespective of any limitations that may be established by the articles of association or by decisions of shareholders, whether published or not.

Directors shall bind the company if, by affixing their signature, they indicate that intention.

Delegation

Subject to Angolan law restrictions, and unless otherwise provided in the bylaws, the board of directors may delegate powers to one or more directors to deal with certain managing matters. However, the board retains overall responsibility for the company's operations and management.

The board of directors can also appoint attorneys to perform certain acts or categories of acts, without the need for an express contractual clause.

Last modified 1 Mar 2021

Angola

Angola

What are the key general duties of directors?

The key duties of a director are set out in the Angola Companies Law, pursuant to which the director:

  • Must observe a duty of care towards the company, demonstrate capability, technical competence and an understanding of the company's business considered appropriate for the role, and execute its tasks with the diligence of a careful and earnest manager.
  • Must observe a duty of loyalty towards the interests of the company, serving the long term collective interests of the shareholders and taking into consideration the interests of other stakeholders such as employees, clients and creditors by ensuring the sustainability of the company. As a specific realization of this duty, the directors must not pursue or develop, directly or indirectly, other activities in direct competition with the company, unless duly authorized by the general meeting of shareholders.
  • Must carry out any acts deemed necessary or appropriate to achieve the corporate purpose in line with the resolutions adopted by the shareholders, the bylaws and the applicable law.
  • Are responsible for drafting merger and spin-off plans, in addition to other documents required or appropriate for the full legal and economic transparency of the transaction, as well as preparing a report in case of change of the company's legal form (i.e. a change to a different type of company).
  • Are responsible for performing and executing all managing acts not specifically reserved by law or bylaws to the general meeting of shareholders.
  • Are responsible for, following a shareholders resolution (except an unlawful resolution or resolutions that are not compliant with the company's by-laws), taking all necessary measures to execute such resolution, as promptly as possible (namely resolutions making any amendments to the company’s bylaws).

In addition, if agreed by the shareholders and set out in the company’s bylaws, the directors must also decide on and implement:

  • The acquisition, disposal and encumbrance of real estate of the company.
  • The disposal, encumbrance and lease of the business establishment of the company.
  • The subscription or acquisition of other companies' shares or the disposal and/or encumbrance of these shares.
  • The establishment of subsidiaries, agencies, branches or other local forms of representation of the company.

In general, the directors are bound to manage a company in a professional and diligent way, which includes compliance with all legal, statutory and contractual requirements.

What are directors' other key obligations?

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

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

Transactions with the company

Whenever there is a conflict of interest between the company and a director, the director shall advise the Chairman of the board of directors and abstain from voting on the resolution concerning that conflict.

The company may only grant loans or credit to directors, make payments on their account, guarantee obligations that they have contracted or make advances to them on account of the respective remuneration, up to the limit of the monthly amount thereof.

Contracts signed between the company and its directors, directly or through another person, shall be null and void except if they have been previously authorised by means of a decision of the board of directors, in which the director concerned may not participate, and if they have obtained the favourable opinion of the supervisory board.

Last modified 1 Mar 2021

Angola

Angola

Breach of general duties

Directors are severally liable towards the company for the damages caused to the company as a result of their actions or omissions that are not compliant with their legal statutory or contractual obligations, unless they prove that their actions/omissions were not caused with intentional or negligent misconduct.

The directors may also be subject to criminal liability.

A lawsuit against the directors may be brought by:

  • The company – in this case a shareholder’s resolution to bring the lawsuit must be approved by the majority of the shareholders, and the lawsuit must be sought within six months from the date of such resolution.
  • In the absence of a lawsuit sought by the company, one or more shareholders who jointly own, at least, 10% of the share capital  may bring a liability suit against the directors to claim reparation for damages caused to the company.

A company may seek a range of remedies against a director for breach of duty including damages, recovery of misapplied property, accounting for profit made in breach of duty, an injunction to prevent breach and rescission of a contract.

Liabilities on insolvency

If during the course of its management the company goes bankrupt, the directors may incur in liability if the bankruptcy is declared fraudulent or culpable. The crime of fraudulent or culpable bankruptcy is punishable with a penalty of two to eight years' imprisonment.

Other key risks

Personal liability for directors may, in certain circumstances, arise under Angolan legislation including that relating to environmental and health and safety, employment, consumer protection and bribery/anti-corruption.  In certain cases, criminal liability may arise.

A director may also be disqualified by the court from acting as a director or from taking part in the promotion, formation or management of a company.  A disqualification order can be made for a variety of reasons (e.g. conviction for criminal offences relating to the running of a company, persistent breaches of statutory obligations such as filing documents with the companies register, being found liable for fraudulent or wrongful trading and generally for conduct which makes a director unfit to manage a company).

Last modified 1 Mar 2021

Angola

Angola

How can directors be protected from liability?

The board of directors or the shareholders' general meeting may declare null and void or annul defective resolutions, at the request of any director, shareholder with the right to vote or of the supervisory board, made within one year of becoming aware of the defect that serves as its basis.

The general meeting of shareholders may ratify any resolution or substitute an invalid resolution if it does not concern a matter that falls within the exclusive competence of the board of directors.

Directors shall not execute or allow to be executed resolutions of the board of directors that are null and void.

Directors' and officers' (D&O) insurance is also available. It typically provides both cover for individual directors against claims made against them in their capacity as director, including defence costs (which applies when indemnification by the company is not available), and company reimbursement when it has indemnified its directors (subject to an excess/retention). Policy exclusions typically include claims in respect of a director's fraud, dishonesty, wilful default or criminal behaviour.

What practical steps can directors take to avoid 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.
  • 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, directors should keep in mind that thet 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.

Last modified 1 Mar 2021