Business Ethics and Corporate Governance, Second Edition

LIABILITY FOR ACTS OF HIS CO-DIRECTORS

A director is not liable for the acts of his co-directors provided he has no knowledge and he is not a party to it. His co-directors are not his servants or agents who can by their acts impose liability on him. Likewise, if a director is fraudulent, his co-directors are not liable for not discovering his fraud in the absence of circumstances to arouse their suspicion.

Moreover, when more than one director is alleged to have neglected his duties of care, all the directors are jointly and severally liable. If an action is brought by the company against only one of them, he is entitled to contribution from other directors.