11. Duty of care, skill, and independent judgment

Abstract

In addition to their fiduciary obligations, directors are subject to duties of care and skill. This chapter discusses the statutory standard of care, skill, and diligence; the content of the duty; and the duty to exercise independent judgement. In looking at care and skill, key issues are the extent to which delegation is possible and the degree to which the delegating director must maintain a residual duty of supervision. The chapter considers the law’s expectations of executive and non-executive directors, including the level of knowledge that they must bring to bear and examines how the standard required reflects their differing roles in the management of the business.