A director-duty allegation often starts with a bad outcome and then works backward. That is risky. The better sequence is to reconstruct what power was exercised, who exercised it, what information existed at the time, whether interests conflicted, and what governing law actually applies.

Use this checklist before sending a demand, resigning, starting litigation, rewriting minutes or publicly accusing a director. Each step exists because skipping it can change the legal classification.

Step 1 — lock down the entity and governing law

Write the exact legal name, registration number, entity type and jurisdiction of incorporation.

Why it exists: “director duties” are not one global rule. Delaware corporate law, UK Companies Act duties and Canada’s federal CBCA differ in text, case law, procedure and remedies.

Do not use a parent company’s jurisdiction for a subsidiary’s board decision without checking which entity made the decision.

Step 2 — define the disputed decision in one neutral sentence

Use date, action and decision-maker.

Example: “On 4 September, the board approved a three-year distribution agreement with Company X.”

Avoid conclusions such as “the board stole the opportunity.” Conclusions come after the record.

Why it exists: neutral phrasing reveals what must be proved.

Step 3 — identify the source of authority

Check statute, certificate/articles, bylaws, delegation, committee terms, shareholder agreement, unanimous shareholder agreement and reserved matters.

Why it exists: a duty analysis can be distorted if the actor did not have the claimed power in the first place.

In Delaware corporations, DGCL §141 provides the baseline allocation of board management subject to the statute and certificate. UK section 171 specifically addresses acting in accordance with the constitution and proper purposes.

Step 4 — freeze the contemporaneous information set

Collect what decision-makers had before approval:

  • board pack;
  • management memo;
  • financial model;
  • forecasts;
  • valuation;
  • legal advice logs or privilege-preserving index;
  • expert reports;
  • emails circulated to the board;
  • minutes and written consents.

Why it exists: hindsight makes every failed decision look easier than it was.

Do not mix later discoveries into the “what the board knew” folder.

Step 5 — create a conflict map

List each director, counterparty, ownership connection, family link, compensation interest, side deal and prospective employment arrangement.

Then record disclosure and participation.

Why it exists: a conflict can change which facts and approval procedures matter. It does not automatically decide legality; local law does.

Step 6 — separate company rationale from individual rationale

Ask why the company said the decision was beneficial. Then separately preserve each director’s personal incentives.

Why it exists: later narratives often blur these two layers.

A transaction can benefit a director and still have a company rationale; it can also look neutral while hiding a personal incentive. Evidence, not labels, resolves the question.

Step 7 — check whether the board had enough process for the decision’s scale

A routine contract and a sale of the company do not require the same practical level of preparation.

Consider:

  • value at stake;
  • irreversibility;
  • time available;
  • complexity;
  • conflict risk;
  • alternatives;
  • reliance on specialists.

Why it exists: process should be evaluated in context, not by counting pages in a board pack.

Step 8 — read the minutes, but do not treat them as the entire truth

Compare minutes with calendar invites, circulated materials, resolutions and follow-up actions.

Why it exists: minutes can be concise and still accurate. They can also omit context. A later “perfect” set of minutes can be more suspicious than an ordinary contemporaneous record.

Never rewrite history after a dispute starts.

Step 9 — identify who suffered the alleged legal harm

Make two columns:

  • corporation;
  • individual shareholder or other person.

Why it exists: the route can differ dramatically.

UK Part 11 derivative claims concern company causes of action; section 994 is a member-protection route. Canada’s CBCA has its own derivative-action and oppression provisions. Do not assume one loss produces one universal claim.

Step 10 — test the strongest innocent explanation

For every allegation, write the best non-breach explanation.

Examples:

  • affiliate contract → only supplier able to meet deadline;
  • no second valuation → company faced a short financing runway;
  • director absent → conflict management;
  • rushed approval → regulatory or liquidity deadline.

Why it exists: a strategy that fails when the first ordinary explanation appears is not ready.

Step 11 — build the deadline register

Include transaction closing, financing deadline, notice periods, meeting dates, contractual cure periods, limitation questions and any court dates.

Why it exists: director-duty disputes are often lost operationally before they are lost legally.

Mark which dates are confirmed and which are assumptions.

Step 12 — preserve without over-collecting

Issue a proportionate preservation instruction where appropriate. Protect board materials, transaction files and relevant communications.

Why it exists: deleting evidence is dangerous, but indiscriminate collection can create privacy, privilege and cost problems.

Ask local counsel about legal holds and data rules.

Step 13 — decide whether the next objective is information, prevention, correction or compensation

Those are different projects.

Information: obtain and verify the record. Prevention: address an imminent irreversible act. Correction: redo or regularize a process where possible. Compensation: assess a completed loss and legal claim.

Why it exists: the remedy should follow the objective, not the other way around.

Step 14 — decide who should speak for the company

In a board split, it may be unclear who can instruct counsel, issue communications or negotiate.

Why it exists: authority disputes can contaminate the legal work itself. Confirm engagement authority, privilege structure and who receives advice.

Step 15 — if you are the accused director, do not “clean up” the file

Do not delete casual messages, backfill minutes, create retrospective approvals or ask colleagues to align stories.

Why it exists: later document manipulation can become a separate and more serious problem than the original decision.

Preserve, explain and obtain advice.

Step 16 — if you are the complaining director, do not confuse dissent with immunity

Recording dissent can be important, but an objection does not automatically answer every duty question.

Consider whether you need additional information, a formal vote, a note in minutes, local advice, a regulatory report or, in extreme cases, resignation. Do not treat resignation as an automatic solution.

Step 17 — check insolvency and liquidity

A board dispute near insolvency requires specialist attention.

Why it exists: creditor interests, restructuring duties, distributions, transactions and personal exposure can change quickly. A shareholder-focused strategy may become inappropriate.

Obtain current cash, debt and default information.

Step 18 — prepare a local-counsel question pack

Keep it short:

  • exact entity;
  • decision;
  • authority;
  • information set;
  • conflicts;
  • process;
  • harm;
  • deadlines;
  • desired short-term result;
  • documents you do not have.

Ask counsel to identify which duties, standards, procedures and remedies actually apply.

A stop/go decision table

Situation Usually pause and investigate Usually escalate local review
poor commercial result, clean record yes if other facts emerge
missing authority record yes if decision is imminent/irreversible
undisclosed personal interest yes promptly
evidence deletion no casual internal handling promptly
insolvency risk do not treat as ordinary shareholder fight urgently
closing tomorrow focus on deadline and available interim route urgently

“Escalate” here means obtain qualified local advice, not automatically file a claim.

Final check before action

You should be able to answer:

  1. What happened?
  2. Who had power?
  3. What did they know then?
  4. What conflict existed?
  5. What process was used?
  6. Who suffered the legal harm?
  7. What date matters next?
  8. What result do we actually want?
  9. What local rule still needs confirmation?

If three or more answers are missing, the next step is usually investigation, not rhetoric.

General corporate-governance information only, not legal advice. Director duties, remedies, standards of review, insolvency rules and procedure vary materially by jurisdiction; verify current law and governing documents with qualified local professionals.

Related Reading

Sources and Scope Notes