Codification of the Common Law Principle of Duty of Care and Skill of Directors Under the Companies Act, 2015

Abstract

Following the collapse of many renowned companies, the directors’ duty of care and skill prescribed under common law has been under scrutiny both internationally and locally. The Companies Act, 2015 has partially codified directors’ duties in an attempt to meet international standards. It is important to evaluate the exact applicable tests for negligence in the application of this (now) statutory duty of care and skill. This research will examine whether the codification of directors’ common law duty of care and skill under sections 145(a) and 145(b) of the Companies Act, 2015 has enhanced clarity and enforcement of the duty, and whether this codification has yielded any development in the realm of corporate law.