someone to share concerns with about board matters outside the boardroom. In the political process involving the use, and occasionally abuse, of power at the top of organizations, such a person has much to offer.
Finally, there is a legitimate role for a director, acting at times of crisis, to be "the safety-valve" – the person who is able to release the pressure, prevent further damage and save the situation. One example could be when the chief executive has to be replaced. Executive directors may not be able to act: their future boss is being appointed. Another example might occur if the company suddenly had to face an unexpected catastrophe – a tragic incident involving employees or consumers, for example. Here the good counsel of a wise member of the board could save the situation.
D. The Responsibilities of Directors
We turn now to the duties, rights and responsibilities of directors.
The body of company law, in the jurisdiction in which a company operates, determines many of the responsibilities that directors in that state or country face. Further duties may be found in the laws of insolvency, consumer protection, monopoly and merger, employment and so on. For the public company, whose shares are traded in the public arena, securities trading and investor protection legislation and the rules of the relevant stock exchange will also apply.
Obviously it is not appropriate in this text to attempt to survey the scope of such rules and regulations around the world. A number of general points, however, can be made.
Firstly, the extent and detail of company law varies considerably between jurisdictions. Continental European countries, such as Germany and France, and other states whose laws are rooted in Roman law, rather than Anglo-Saxon case law, tend to have more prescriptive rules to constrain and regulate corporate governance. Moreover, within the case-oriented legal structures the extent of company regulation varies considerably. As an indication the basic companies’ ordinance in Hong Kong runs to 3 675 pages, in Singapore to 567 pages and in England to 630!
Secondly, in most countries the tendency in recent years has been to increase the statutory requirements for corporate disclosure and the regulation of corporate affairs. Further, the tendency to resort to civil litigation has been increasing. The threat of court action has become a significant element in the corporate governance process in some countries. This has been particularly the case in the United States, where class actions (that is the ability to join all members of a class, such as shareholders, in a single action) and contingent fees (that is the process of a lawyer offering to take a case on the basis of tees contingent on the success of the case and the size of any damages awarded – a practice, incidentally, that is prohibited in many other countries) have encouraged such litigation. But other countries, such as the United Kingdom, Australia and Canada, have also seen significant increases in actions being brought against companies, their auditors, their boards and individual directors by shareholders and others alleging, Inter alia, negligence and directors' failure to exercise their proper duties of care and trust.
Thirdly, despite the significant differences in the legal position of directors between jurisdictions, there are a few very general points that are broadly applicable to directors everywhere.
