Independent Non-Executive Director’s duty of care, skill, and diligence

Essay Topic
“The board of directors of an issuer is collectively responsible for its
management and operations. The Hong Kong Stock Exchange expects the
directors, both collectively and individually, to fulfil fiduciary duties and
duties of skill, care and diligence to a standard at least commensurate with
the standard established by Hong Kong law”. # Note 1.
“The board of directors is collectively responsible for promoting the success
of the company by directing and supervising the company’s affairs and in
particular to provide entrepreneurial leadership of the company within a
framework of prudent and effective controls which enable risk to be
assessed and managed.” # Note 2.
An Independent Non-Executive Director (INED) is expected to provide
independent advice to senior executives on business strategies; risk
management and internal control.
Requirement
You are required to critically analyse the development of an INED director’s
duty of care, skill, and diligence from the common law position of Re City
Equitable Fire Assurance Co Ltd [1925] Ch 407 up to and including
Companies Ordinance (Cap. 622) and any relevant provisions under the
Main Board Listing Rules relating to the roles and responsibilities of an
INED.
NOTES
Note 1: Chapter 3.08 Main Board Listing Rules.
Note 2: Page 21, Review of the role and effectiveness of non-executive
directors, Derek Higgs, Jan 2003)
The length of the essay should be no less than 1000 words excluding
bibliography.
Intended Learning Outcomes (ILOs)
After completing this essay exercise you will be able to: (1) use basic tools
for legal research (ILO e), communicate adequately in written English (ILO
d), and conduct analysis and critical discussion in relation to directors’ duties
and liabilities. (ILOs a, c & f).
Structure of the Essay
In order to write your essay you can use multiple resources including legal,
economic, accounting, management and other materials. You can structure
your essay as you wish yet include sections entitled as “Critical Discussion”
as this section will have strong weight on your final grade. Also, at the end
of the essay include a section “Bibliography.” In this section you will formally
list the resources that you used to write the essay. These resources will also
be cited in the text of the essay following the standard citation rules. If you
use a wide variety of resources to write your essay, the quality of it will
certainly be greater, as will be the depth of your analysis and your final grade.
Sources for Research
In order to build your essay we recommend that you use relevant legal
sources such as statutory rules, case law, policy documents and journal
articles as well as any other source as you consider fit such as economic,
finance or management literature. Initial, basic sources you may want to use
to jump-start your research are as follows:
• Visit PolyU Library. It holds a variety of textbooks in company law (UK
and HK) and corporate governance as well as valuable electronic databases
may want to use to plan and write your essay.
• Westlaw database. It contains law cases and journal articles
(http://www.lib.polyu.edu.hk/databases/westlawhk)
• Google Scholar (https://scholar.google.com.hk/)
• Social Science Research Network
(https://www.ssrn.com/en/index.cfm/lsn/)