What is your legal commitment as a company director

Are you aware of your legal commitment as a director of a childcare? Do you know that, as a director, there are certain code of conducts that you should be adhering to when conducting your business?

Do you know what your duties are as a director of your daycare centre? Many business owners are unaware of the legal implications of being a director of an establishment. Whilst understandably, many of us are not legal professional, it is important to know what’s required of you as a director so that you can make a conscious effort to stay away from situations which could potentially put you in conflict with your duties as a director.

A director’s duties can be categorized broadly as:
• Fiduciary Duties
• Duties of skill, care and diligence
• Statutory Duties

1) Fiduciary Duties

a. A director is required to act in genuine interest of the company’s interest at all times
As a director, he is required to act honestly and conduct due diligence when discharging his duties as a director. Should a director be forced to make a decision or undertake a transaction which may seem unviable or disadvantageous for the company, he must be able to justify other intangible benefits for the company; either to the company as a corporate entity or its group of company, the members and employees in the company or the interest of the creditors in the company.

b. A director must avoid positions where his personal interest may be in conflict with his duty
A director must ensure that he acts in the best interest of the company at all times and not be in a position where his personal interest will impair his judgment resulting in a situation where his personal interest take precedence over the company’s interest.

c. Duty to use powers for proper purposes and not for any collateral purpose
A director must understand that he is the trustee of the company’s assets and the company assets entrusted to him are to be applied for the company’s purpose and interest. It is considered a breach of fiduciary duty should the director misapply the company’s assets or abuse his power. Even if he was misguided on what was in the company’s interest, the director is still in breach of his duty should be misuse his powers. And should he misapply the company’s funds, he is in breach of criminal breach of trust, be it or not he has personally benefited from it. A director must not accept any form of reward or payment from any third party other than his company.

2) Duties of skill, care and diligence

A director must ensure that he exercise reasonable care and skill when undertaking his director responsibility with any additional knowledge and experience which he actually has..


3) Statutory Duties

A director’s breach of statutory duty can be a civil breach rendering the director liable to the company for any profit made by him or for any damage suffered by the company or a criminal offence.

a. Duty to disclose certain important information
A director is bound to disclose certain information to the company such as interest in a proposed or existing transaction or arrangement with the company or loans to director, etc. The type of information that a director is required to disclose can vary slightly from country to country and state to state.

b. Duty to ensure that the accounts are properly prepared
It is the director’s duty to ensure that the accounts are properly prepared and managed. The accounts should provide a true and fair view of the state of affairs of the company and explain its transactions.

In essence, it is important to note that a director’s duty to the company is an important one. He must at all times act with care, honesty and diligence and make decisions which are in the best interest of the company and not oneself.

For more essential information and resources on starting a successful daycare business, please visit www.setupadaycare.com


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Mediation How-To For Trial Lawyers

The June issue of Trial, a publication of the American Association for Justice, contains a helpful “How-To” article for trial lawyers on the mediation of commercial disputes. Stewart I. Edelstein wrote the lengthy “Hot-To” article, which discusses such topics as choosing the right mediator, preparing to mediate, selecting which strategies to utilize, getting past impasse and finalizing the mediation. The tips are summarized quickly for you below.

Choosing a Mediator
Mr. Edelstein writes that you should chose a mediator “…who is impartial and has a strong track record for effective problem-solving, excellent negotiating skills, patience, trustworthiness, a keen business sense, and a good sense of humor.” However, sometimes a general mediator won’t get the job done. You may need to choose a mediator who focuses on a particular area, such as construction or patents.

Preparing to Mediate

Failing to prepare is one of the biggest mistakes lawyers make in connection with mediation. Mr. Edelstein suggests many tips, including:

- Decide on an initial demand
- Discuss creative solutions with client before mediation
- Provide a complete pre-mediation statement
- Discuss proper mediation demeanor with client
- Work out an agreement for the terms of the mediation

Selecting Strategies
Make sure the strategies you select are the ones that will achieve the final results that the client seeks. Carefully consider the opening position. It is an important opportunity to convey to your opponent that you are a formidable adversary prepared to litigate the case to conclusion, if necessary. Nevertheless, recognize the benefits to both parties of resolving the case sensibly through this mediation. Finally, be patient, open-minded and involved.

Getting Past Impasse

This can easily be achieved by a good mediator with effective strategies. Mr. Edelstein includes many “impasse breakers” such as:

- Refocus on the importance of the ongoing relationship
- Emphasize mutual benefits of resolving the dispute without publicity
- Review risks and costs
- Consider non-monetary settlement components
- Consider a “double-blind” proposal
- Take a recess
- Transform the process from mediation to arbitration

Finality is Key

When the mediation is final, and if it is successful, Mr. Edelstein strongly recommends getting the terms of the agreement in writing before mediation concludes. Consider having a computer and printer available to draft the terms of the final agreement so it can be signed on the spot.

Preparation, however, is Mr. Edelstein’s biggest concern. It can be the difference between success and failure. An effective mediation can save time, money and relationships.

The National Arbitration Forum offers mediation services in all 50 states. Please see their Mediation Solution page for more information.



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