Research Handbook on Directors’ Duties

Research Handbook on Directors’ Duties

Research Handbooks in Corporate Law and Governance series

Edited by Adolfo Paolini

Directors’ duties and liabilities have become the centre of a general legal discussion following the 2008 financial scandal that resulted in global recession. Questions have arisen regarding the ways in which the directors of the world’s major financial institutions have handled their duties and how their decisions have impacted investors, shareholders and consumers. This detailed Handbook discusses the nature of the relationship between a company and its directors, assessing issues such as how duties are discharged, liabilities that may arise and what interests directors should consider before embarking on commercial ventures.

Chapter 7: A brief note on directors’ duties of care and loyalty in Portugal

Pedro Pais de Vanconcelos

Subjects: law - academic, company and insolvency law, comparative law, corporate law and governance

Extract

Duties of company directors in Portuguese Law developed from a simple formulae to ever increasingly detailed statutes. For a long time, since at least 1888 (Commercial Code), duties of directors were legally based on the contract of mandate. The relationship between the director and the company was seen as contractual, and directors were bound by very broad and general duties of diligence and loyalty. Later, in 1969, the law (Decree-Law 49,381, of 15.11.1969), expressly obliged the directors to act “with the diligence of a judicious and orderly manager” (diligência de um gestor criterioso e ordenado). An even more detailed formula was added more recently: “the directors of a company must act with the diligence of a skilful and careful manager, in the interest of society, taking into account interests of shareholders and employees”. Finally, art. 64º(1) of the Companies Code was revised in 2006.

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