I’m a new company director, now what?!
The resolution has been passed and you are now officially a company director (or an advisory board member, or a managing committee member). Congratulations!
“Well, thanks”, I hear you saying, “but now what do I do?!”
Great question. And it’s the same one I asked myself after I was appointed as a director of a financial institution last year. My thought process went a little like this… “Wow, they really must think I have something to really offer the organisation, this is fantastic!”… “But I have no idea about this business, or the financial industry, or about being a director”… “What have I gotten myself into”… “When will they find out that I have no idea what I’m doing”… “When will they discover I am not as good as they think I am”… and so on and so forth.
Even though this compelled me to learn as much as I could as quickly as I could, there was one thing that I learnt very quickly, your fellow directors do not expect you to know everything about everything when you first become a director of a company. And a little side note: you should never feel like you know everything about everything. Once you do you stop learning and you start rotting.
In a general sense, as a company director what you have to do falls into two broad categories – what you legally have to do, and what you should want to do as a valuable member of the organisation’s ultimate group of leaders.
What you have to do
Firstly we will take a look at what you legally have to do in your role as a director; these are otherwise known as “duties and responsibilities of directors” and are set out in the Corporations Act 2001, sections 180-184 to be exact.
As a director of an Australian company, you have a fiduciary duty to the company to act in good faith, and with care and diligence (section 180). Furthermore, section 181(1) states that “A director or other officer of a corporation must exercise their powers and discharge their duties:
a) in good faith in the best interests of the corporation; and
b) for a proper purpose.
What this means is that you have to make sure you:
a) Avoid a conflict of interest,
b) Do not use your position for personal gain or in a manner detrimental to the organisation (182),
c) Do not use the information you are given for personal gain or that is detrimental to the organisation (s. 183), and
d) Are not reckless or intentionally dishonest (s. 184).
Directors also have a whole set of other statutory duties that are drawn from the many pieces of legislation, guidelines, and codes of conduct that affect your business operations (for example, Workplace Health and Safety). I would never be able to list them all here – however, ensure you familiarise yourself with your various responsibilities.
What you should want to do
“If you get yourself involved with a company, be sure to involve yourself with the company.”
What this means is if you choose to become a director (or advisory board member, or committee member), then be sure you commit the necessary time and energy to be a valuable and valued member of the board.
This not only includes attending all of the scheduled board meetings (a minimal requirement in my books), but also committee meetings, community activities that your organisation is involved in (where appropriate and beneficial), annual general meetings (AGMs), and director social activities.
Your commitment should also include spending time, energy, and resources on keeping yourself up-to-date on the industry and larger business landscape your company operates in, and on your skills, knowledge, and abilities as a director through reading, formal training (like the Boardroom Bootcamp course), and other learning methods (participating in forums, webinars, seminars, classes, etc.).
Your aim is to be delivering value to the organisation and to the board itself in an ethical way that meets all of your obligations as a director.