Duties And Liabilities Of Directors - 2018

Introduction

This Memorandum provides a summary of duties and liabilities of directors of companies incorporated under the laws of Bermuda. It is not intended to be an exhaustive statement of the law in this area but merely to be of some guidance to persons who act as directors of such companies. Particular circumstances or transactions should be the subject of specific legal advice given on the relevant facts at the relevant time.

Companies formed in Bermuda and the duties and liabilities of their directors are governed by the company's Memorandum of Association and Bye-Laws (together its constitution) and the Companies Act 1981 (the "Companies Act") and the common law so far as it has not been amended by statutory provisions. The Bermuda courts would regard as highly persuasive the decisions of the English courts in relation to such matters.

Statutory Duties of Directors

The Companies Act requires directors of companies, in exercising their powers and discharging their duties, to act honestly, in good faith and with reasonable care, diligence and skill. As a result directors will need to be diligent in ensuring that the various obligations of the company, set out below, are carried out. Directors' obligations are owed to the company, not the shareholders.

Maintaining registers

The Companies Act requires each company incorporated under it to maintain certain registers. The Directors, as part of their general duty of care, should ensure that such registers are kept in the appropriate location and maintained in good order. The registers are:

The Register of Members: To be kept at the registered office of the company in Bermuda. The register contains the names and addresses and details of shares issued to the company's members. The Register of Directors and Officers: To be kept at the registered office of the company in Bermuda. The register contains the names and addresses of each of the company's directors and officers. Maintaining records of account

The directors are also responsible for ensuring that the company complies with the requirements of the Companies Act to maintain proper accounting records. Unless waived by the members, the company's accounts must be audited and inclusive of the auditors' report and be available to the members.

Registered office

The directors are also responsible for ensuring that the company complies with the requirements of the Companies Act to maintain a registered office in Bermuda, and to ensure that its...