Constraints on Discretion: Part 1—Directors

Abstract

This chapter discusses two general types of behavioural constraints on managerial decision-making that can be found in most legal systems: the duties of care and loyalty. The former deals with the care, skill, and diligence that a director is expected to employ in managing a company. The latter deals with situations where a director’s interest conflicts with the interests of the company, notably where the director is a shareholder or otherwise involved in a business partner of the company or takes advantage of a business opportunity that could also be of commercial interest to the company.