How onerous are the general duties?
To put the new provisions of the Act into perspective, it is important to remember that directors owe their general duties to the company, i.e. only the company can enforce them. The Act does provide for a new derivative right of action which will enable shareholders to sue directors on behalf of a company (and this right is wider than the existing common law position). However, given the number of substantive safeguards that need to be satisfied before such a derivative action can be brought, it is thought that the Act will not result in a significant increase in litigation against directors. Also, directors are able to obtain a limited indemnity from the company in relation to the cost of proceedings against them by a third party.
