The duties of Directors for Community Benefit Societies are summarised below and you can find more detailed information through this link https://www.uk.coop/resources/directors-toolkit/essential-society-director.
Who can stand as a director?
Directors are not required to hold any specific qualifications. However, they must be able to carry out the role to the best of their ability and not be disqualified from acting as a director. LVC expects that all Directors are members of the society with the only exception in the case of co-opted members.
As the College is not yet in a position to have many students or alumni to act as Directors, Student Representative Directors can be students and alumni of Vaughan College (1862-2013) and of the Vaughan Centre of Lifelong Learning (2013-2020).
Broadly there are three categories of legal duty:
The duty of good faith
A Director is in a position similar to that of a trustee – namely being responsible for somebody else’s (the Society’s and the members’) property. A Director is required to:
- act with complete integrity in any dealings with or on behalf of the society
- treat the Society’s affairs as confidential and should only disclose information from meeting that is already in the public domain or as authorised by the Board
- act at all times in the best interests of the Society; a Director never uses their position to obtain a benefit or advantage for themselves, for other people or other organisations
- accept decisions made by the governing body in accordance with the law and the Society’s rules, even they disagree with it and voted against it if a vote was taken
- avoid putting themselves in a position where their duties and responsibilities as a Director conflicts with other personal interests.
The duty to take care
Directors are not expected to be experts, but they are expected to use such expertise as they have. They are encouraged to develop their skills and knowledge to ensure that they are properly equipped for their responsibilities. Duty of care is demonstrated by:
- Reading papers before governing body meetings and arriving properly prepared
- Asking questions, requesting clarification if further information or explanation is needed, and challenging the members of the management executive when not satisfied with the answers given
- Taking advice both from the management executive and from independent advisors, when appropriate, in the best interests of the society
- Disclosing any material interest to the governing body as provided for in the rules of the society.
The duty to obey the law
Directors have a duty to conduct the affairs of the Society under the Co-operative and Community Benefit Societies Act 2014 and common law. They must also follow the rules of the society.
Companies Act 2006 codified directors’ duties for limited companies. Although this codification doesn’t apply to societies, the general duties set out in company law are based on developed common law and equitable principles and although society Directors are not obliged to follow them, it is best practice to do so. This means that Directors have a duty to:
- obey the law and comply with society rules
- use powers only for the purposes for which they were conferred
- act in the Society’s best interests
- exercise independent judgement
- demonstrate care, skill and diligence
- avoid conflicts of interest
- not to misuse the society’s information or property or make secret profits