n Without Prejudice - Directors' legal responsibilities override corporate governance diktats : company law

Volume 8, Issue 2
  • ISSN : 1681-178X



The duty of good faith is the highest duty of any director. Included is the duty of loyalty, acting in the best interests of the company and honestly applying one's mind to the issue before the board. It is the obligation to follow this legal duty that has resulted in a general acceptance that corporate governance codes should be on a "comply or explain" basis, rather than "comply or else" basis. In short, governance codes should contain recommended practices, which, if not in the interests of the company, the directors have a legal duty to adopt an alternative.

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