Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd
The duty of care, skill and diligence requires directors to be involved in managing the company, so much so that being a passive director is itself a breach of duty. n1 In reality, directors do not manage all of the company's business themselves but leave appointed employees to deal with speci...
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| Format: | Article |
| Language: | English |
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LexisNexis
2009
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| Online Access: | http://irep.iium.edu.my/3530/1/Directors_Reliance_and_Responsibility_to_Supervise_and_Auditors_Duty_of_Care.pdf |
| _version_ | 1825644434044223488 |
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| author | Mohd. Sulaiman, Aiman @ Nariman |
| author_facet | Mohd. Sulaiman, Aiman @ Nariman |
| author_sort | Mohd. Sulaiman, Aiman @ Nariman |
| collection | IIUM |
| description | The duty of care, skill and diligence requires directors to be involved in managing the company, so much so that
being a passive director is itself a breach of duty. n1 In reality, directors do not manage all of the company's business themselves but leave appointed employees to deal with specific scope of work. However, this does not resolve the problem faced by directors in delegating authority. The extent to which directors may rely on delegates in the exercise of power or on the information provided by others to enable directors to make business decisions is often fact-sensitive.
There is also a difference in the standard of care between executive and non-executive directors. As noted in The
Equitable Life Assurance Society v Bowley, n2 'there is a considerable measure of agreement about the duty owed in
law by a non-executive director to a company. In expression it does not differ from the duty owed by an executive
director but in application it may and usually will do so.
The recent Singapore case of Gaelic Inns Pte Ltd v Patrick Lee Pac, n3 which went on appeal to the Singapore
Court of Appeal (Planassurance PAC Formerly known as Patrick Lee PAC v Gaelic Inns Pte Ltd), n4 highlighted the
relationship between directors amongst themselves and with auditors in relation to a company's financial statements.
While the Gaelic Inns case is not the first case on the duty of care, skill and diligence to be decided in Singapore, n5 it discusses the issue of directors' duty of care when delegating powers and what amounts to reasonable reliance. The case is an interesting read as it involves non-executive directors' reliance on management. The case is also topical as it also focuses on the relationship between the auditor and the company, a topic of interest in view of numerous financial reporting failures and the current economic meltdown. |
| first_indexed | 2024-03-05T22:32:45Z |
| format | Article |
| id | oai:generic.eprints.org:3530 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:32:45Z |
| publishDate | 2009 |
| publisher | LexisNexis |
| record_format | dspace |
| spelling | oai:generic.eprints.org:35302018-08-14T02:20:50Z http://irep.iium.edu.my/3530/ Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd Mohd. Sulaiman, Aiman @ Nariman K Law (General) The duty of care, skill and diligence requires directors to be involved in managing the company, so much so that being a passive director is itself a breach of duty. n1 In reality, directors do not manage all of the company's business themselves but leave appointed employees to deal with specific scope of work. However, this does not resolve the problem faced by directors in delegating authority. The extent to which directors may rely on delegates in the exercise of power or on the information provided by others to enable directors to make business decisions is often fact-sensitive. There is also a difference in the standard of care between executive and non-executive directors. As noted in The Equitable Life Assurance Society v Bowley, n2 'there is a considerable measure of agreement about the duty owed in law by a non-executive director to a company. In expression it does not differ from the duty owed by an executive director but in application it may and usually will do so. The recent Singapore case of Gaelic Inns Pte Ltd v Patrick Lee Pac, n3 which went on appeal to the Singapore Court of Appeal (Planassurance PAC Formerly known as Patrick Lee PAC v Gaelic Inns Pte Ltd), n4 highlighted the relationship between directors amongst themselves and with auditors in relation to a company's financial statements. While the Gaelic Inns case is not the first case on the duty of care, skill and diligence to be decided in Singapore, n5 it discusses the issue of directors' duty of care when delegating powers and what amounts to reasonable reliance. The case is an interesting read as it involves non-executive directors' reliance on management. The case is also topical as it also focuses on the relationship between the auditor and the company, a topic of interest in view of numerous financial reporting failures and the current economic meltdown. LexisNexis 2009 Article PeerReviewed application/pdf en http://irep.iium.edu.my/3530/1/Directors_Reliance_and_Responsibility_to_Supervise_and_Auditors_Duty_of_Care.pdf Mohd. Sulaiman, Aiman @ Nariman (2009) Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd. Malayan Law Journal Articles, 4 (44). i-xiv. ISSN 0025-1283 http://www.lexisnexis.com/ap/auth/ |
| spellingShingle | K Law (General) Mohd. Sulaiman, Aiman @ Nariman Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title | Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title_full | Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title_fullStr | Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title_full_unstemmed | Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title_short | Directors' reliance and responsibility to supervise and auditors' duty of care: Planassurance PAC formerly known as Patrick Lee Pac V Gaelic Inns Pte Ltd |
| title_sort | directors reliance and responsibility to supervise and auditors duty of care planassurance pac formerly known as patrick lee pac v gaelic inns pte ltd |
| topic | K Law (General) |
| url | http://irep.iium.edu.my/3530/1/Directors_Reliance_and_Responsibility_to_Supervise_and_Auditors_Duty_of_Care.pdf |
| work_keys_str_mv | AT mohdsulaimanaimannariman directorsrelianceandresponsibilitytosuperviseandauditorsdutyofcareplanassurancepacformerlyknownaspatrickleepacvgaelicinnspteltd |