Corporate Governance

Directors' duties

You are a director or officer, or about to become one, and need to understand what is expected of your conduct and how liability toward the company and third parties is determined.

In one line

This page explains the duties and liability regime of company directors and officers. It does not cover the registration of officers with the registry or the corporate criminal liability of the legal entity, which is addressed in the integrity program section.

First steps

Understand the scope of the duties of loyalty and diligence under article 59 of the LGS.
Identify and disclose conflicts of interest.
Make informed decisions and keep a record of them.
Document objections and dissent, with notice to the sindicatura.
Respect the body's non-delegable powers and authority.
Assess whether to obtain directors' and officers' liability insurance.

Loyalty and diligence as the standard of conduct

Article 59 of the LGS establishes that directors and representatives must act with the loyalty and diligence of a good businessperson. This standard requires acting in the company's interest, with due information and avoiding situations of conflict.

The duty of loyalty requires putting the company's interest ahead of one's own, refraining from taking advantage of the company's business opportunities, and disclosing conflicts of interest. The duty of diligence requires making informed decisions with the care of a prudent administrator.

Liability regime

Article 274 of the LGS governs directors' liability: they are jointly and unlimitedly liable to the company, shareholders and third parties for poor performance of their duties, violation of the law, the bylaws or internal rules, and for any harm caused by willful misconduct, abuse of authority, or gross negligence.

The law provides mechanisms for assigning specific functions and exempting from liability the director who recorded their opposition and gave notice to the sindicatura. Documenting each member's actions is essential for delimiting liability.

How to reduce exposure

Acting with sufficient information, recording deliberations and votes, managing conflicts of interest, and respecting the body's authority are the main tools for demonstrating diligence. The existence of committees and an integrity program reinforces this framework.

Preventive advice makes it possible to anticipate risk situations and define protocols before they become contingencies.

Common mistakes

Taking personal advantage of the company's business opportunities.
Voting on decisions without sufficient information about their consequences.
Failing to record dissent from questionable decisions.
Ignoring conflicts of interest in related-party transactions.
Taking office without understanding the scope of unlimited joint liability.

Frequently asked questions

What is the standard of conduct for a director?

Article 59 of the LGS requires acting with the loyalty and diligence of a good businessperson, meaning acting in an informed manner and in the company's interest.

How are directors held liable?

Under article 274 of the LGS, they are jointly and unlimitedly liable to the company, shareholders and third parties for poor performance, violation of the law or bylaws, willful misconduct, abuse of authority, or gross negligence.

Can a director be exempted from liability?

The LGS provides for an exemption for a director who took part in the decision but recorded their written opposition and gave notice to the sindicatura, among other cases.

Does assigning specific functions limit liability?

It can affect how liability is graduated, but it does not automatically exempt a director. Each director's conduct is assessed based on their specific involvement and diligence.

This page is informational and does not replace professional advice on your specific case. It does not imply any promise of results.

Protect your role as a director or officer

We advise directors and officers on their duties and exposure to liability. Contact us for a preventive consultation.

Ask via WhatsApp