CEO, CFO, COO are also “directors”

The definition of a “director” is not limited to a person who is formally appointed as a director.

Whether a person is a director depends more on the person’s functions than title.

The definition of a “director” under section 2 of the Companies Act 2016 is not exhaustive. It includes a person in accordance with whose directors or instructions the majority of directors of a corporation are accustomed to act and an alternate or substitute director.

In respect of certain directors’ duties and responsibilities under the CA 2016, section 210 widens the definition of “director” to include CEO, CFO, COO or any other person primarily responsible for the management of a company. This means they would also be liable for their breach of directors’ duties and responsibilities under the CA 2016 where the definition of “director” includes them.

For example, under section 213, CEO, CFO, COO or persons primarily responsible for the management of a company must exercise their powers for proper purpose and in good faith in the company’s best interest. The business judgement rule in section 214 applies to them and they are responsible for actions of delegatee pursuant to section 216.

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#directorsliabilities

This post was first posted on Linkedin on 27 April 2021.

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