AN EXAMINATION OF THE DIRECTOR’S DUTY OF CARE AND SKILL UNDER COMPANY LAWS OF NIGERIA AND THE UNITED KINGDOM

In the case of a sole proprietorship, the sole proprietor personally takes charge of the affairs of his venture. In fact, he is his venture. However, for the registered company, having a distinct personality and, often, many shareholders, it becomes necessary to put a few persons in charge of matters for the whole. These few at the helm of affairs are the directors. Company legislations and the courts have created certain principles regarding the person and office of the company director. One of such principles requires the director to exercise care, skill and diligence in the course of discharging his duties. This is because the company is a mere legal fiction’ and therefore, the directors are its directing mind and will and control what it does.” The company director is accordingly considered an agent of the company when he acts on its behalf and within his powers.’ He is obliged to observe care and skill as a “duty” because the company can enforce this against him in an action for negligence.* The legal principle that requires the director to exercise care and skill, though now codified, was originally a common law creation developed from the tort of negligence. The director’s duty of care and skill is simply a manifestation of the general duty of care imposed on all individuals in the conduct of activities, so that a person may be liable to pay compensation -when found to have been negligent by causing harm to someone else.° It is this same principle that is extended to corporate law. The duty stems from the idea of company law having to balance the need for directorial accountability with the need to permit a certain amount of entrepreneurial risk taking.