Interlocking Effects Of Directors And Management

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Interlocking effects of directors 1. Introduction Corporate directors are binding by the law of duties expressly to act properly in interests of the company when performing their functions and exercising their power. Law terms not only promote good corporate governance to eliminate agency costs but also enforce fiduciary duties of directors to corporates. Despite the importance of complying with duties, Hong Kong directors, with interlocks a common situation, are challenged by the media on their capacity of standards compliance and high-quality performance for all directed corporations. This essay is dedicated to interlocking directorates. It will review literatures under the framework of both legislation and management, identify double-side effects of interlocks, discuss interlocking directors’ capacity of duties meeting and suggest possible solutions to the problem. 2. Bibliography 2.1. Main duties of directors Two main sources of directors’ duties are equitable fiduciary duties from general law and duty of care from New CO (Cap622) s.465. Companies Registry published “A Guide on Directors’ Duties” to generalize 11 directors’ principles including duty to exercise care, skill and diligence, duty to avoid conflicts between personal interests and interests of the company and duty not to gain advantage from use of position as a director. 2.2. Interlocking directorates in Hong Kong Interlocking directorates is a conventional business practice where a company 's director also

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