Directors of companies in Singapore have a legal obligation to act in the best interests of the company and to comply with their legal duties. However, there is a high possibility that disputes, and liability issues arise in the course of their duties. Below are five ways to handle disputes and the liability of a director of a company.
Understand Your Legal Duties
First and foremost, it is essential to understand these legal duties as a director of a company. Directors have a fiduciary duty to act in the best interests of the company and to exercise reasonable care, skill, and diligence. Directors must also comply with their legal obligations, all laid down under different laws and statutes.
Purchase Directors and Officers (D&O) Liability Insurance
Directors and Officers (D&O) liability insurance can provide protection for directors against claims made against them for wrongful acts committed in the course of their duties. D&O insurance can cover legal costs, settlements, and damages resulting from claims made by shareholders, regulators, or other stakeholders. D&O insurance can also help to attract and retain directors by providing them with protection against personal financial losses resulting from claims made against them.
Seek Legal Advice
Directors who are facing disputes or liability issues should seek legal advice from a qualified lawyer with experience in corporate law. A lawyer can provide guidance on legal obligations, risk management, and dispute resolution strategies. Seeking legal advice can help directors to understand their options and make informed decisions.
Implement Good Governance Practices
Directors can prevent disputes and liability issues by implementing good governance practices. Good governance practices can include establishing clear policies and procedures, conducting regular training for directors and employees, conducting regular audits, and establishing an independent board of directors or an audit committee. These practices can help to prevent conflicts of interest, ensure compliance with legal and regulatory requirements, and improve transparency and accountability.
Adopt Alternative Dispute Resolution (ADR) Methods
Directors who are facing disputes may consider using alternative dispute resolution (ADR) methods, such as mediation or arbitration, instead of going to court. ADR methods can be less expensive and less time-consuming than going to court, and they can allow parties to resolve disputes in a more collaborative manner. ADR methods can also help to preserve relationships and avoid damaging publicity that can result from court proceedings.
Directors of companies in Singapore can face disputes and liability issues in the course of their duties. However, by understanding their legal duties, purchasing D&O liability insurance, seeking legal advice, implementing good governance practices, and adopting alternative dispute resolution methods, directors can protect themselves and the interests of the company. It is important for directors to take a proactive approach to managing disputes and liability issues and to seek professional advice when necessary.
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you would like an initial consultation or simply more information, please email us at email@example.com or contact:
Walter Silvester, Managing Director