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Powers of directors (The powers of directors that are usually included in…
Powers of directors
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The directors are responsible for the operation and management of a company both on a day to day basis and in the long term
Directors have extensive powers to manage the company and these are serviced from the company's articles
The articles of a company commonly contain specific provisions and restrictions relating to the exercise of their powers, for example borrowing powers, although the limitations are usually kept to a minimum so as not to disturb the efficient management of the company
The wide powers given to directors represent and/or act on behalf of the company mean that they are responsible for the arrangements relating to the understanding and obligations of the company's statutory duties
They can be liable to penalties should the company fail to comply and are sometimes personally liable for the consequences of their actions (such as wrongful trading)
The directors' powers cannot be overruled by the members of the company as they do not act as agent for some or even all the members
In carrying out their duties, directors are expected to attain certain standards. To avoid liability for acts done by them, directors must be able to show that they acted honestly and reasonably and that they ought fairly to be excused
Directors may be personally liable if they are negligent and/or make a misrepresentation in that capacity
Multinational Gas and Petrochemical Co Ltd v Multinational Gas and Petrochemical Services Ltd (1983)