CS Executive · Company Law and Practice · Directors
Meera is a non-executive independent director of Orion Pharma Ltd. The company is penalised for a default in a statutory filing. Meera attended Board meetings, was never informed of the lapse in the Board process, and did not consent to or connive in it. What is her likely liability?
Meera is not liable. An independent director is liable only for company defaults that occurred with her knowledge attributable through Board processes, and with her consent or connivance or where she failed to act diligently. Holding office on the date of default is not enough.
- AShe is liable in the same way as the managing director because all directors are jointly liable
- BShe is not liable, because an independent director is liable only for acts that occurred with her knowledge attributable through Board processes and with her consent, connivance or lack of diligenceCorrect
- CShe is liable merely because she held office on the date of default
- DShe is liable for half the penalty as a non-executive director
Explanation
For an independent director or non-executive director who is not a promoter or KMP, liability arises only for acts of the company that occurred with her knowledge, attributable through Board processes, and with her consent or connivance or where she did not act diligently. None of these is present on the facts. The other options wrongly impose automatic or fractional liability.
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