Business Ethics and Law

Roger’s Responsibilities as a Director

Roger has a number of responsibilities to the stockholders and the business as a whole as a director. One such responsibility is the obligation to act in good faith, which entails that he must make sure all of his decisions are in the best interests of the stockholders. (Clark, 2017). This is significant because the board’s decisions affect how long a company’s key competencies will exist and be retained.

Second Responsibility: Acting for the Good of All

Second, Roger has a duty to use his authority for the good of all, not just for himself. This is vital since it preserves the integrity of all decisions made by the board since they are aimed at the helping the company to continue sustainably.

Third Responsibility: Avoiding Reckless Trading

Thirdly, Roger must avoid reckless trading that might culminate into significant financial losses or reputational damage to the company (Clark, 2017). Therefore, before the company embarks on an investment strategy, Roger has a responsibility to critically evaluate the investment decision using mechanisms such as the payback period, net present value, and internal rate of return. The use of these approaches would enable him to evaluate the risk-return trade-off and determine whether a certain investment decision is too risky (Knepper et al., 2016). If the decision is risky, Roger has a responsibility to notify the other directors so that the investment strategy is terminated.

Duties of Roger as a Director

Besides, Roger is bound to exercise due diligence and care while making company decisions by considering the company’s nature, and the nature of the decision (Clark, 2017). Therefore, before settling on a certain decision, Roger should analyze all the possible consequences of that decision on all the stakeholders, and this is important in identifying the drawbacks and benefits of the decision. As a director, Roger is also responsible for filing compliance documents per the Companies Act, and this ensures that the company does not face court battles that might lead to its winding up (Knepper et al., 2016). Additionally, directors like Roger should pass the solvency test which determines whether the company can meet its debts as they fall due since failure to do so might lead to the company’s liquidation.

Defenses Available to Roger

One of the defenses available to Roger is the business judgment rule in which Roger would argue that his proposal of manufacturing sport utility vehicles was aimed at improving the company’s core competencies and that he made it in good faith for the benefit of all the shareholders (Clark, 2017). Besides, Roger would state that he had no vested interest in the proposal and that at the time, he informed himself regarding the matter to the extent he believed it to be appropriate.

Second Defense: Collaborative Decision Making

Secondly, Roger might argue that he did not act solely but relied on others to make the decision (Knepper et al., 2016). Roger would present his case before the court illustrating that he liaised with finance managers, the other directors, and the chief accountant and therefore he is not individually responsible for the circumstances surrounding his company. To do this, Roger would have to deliver the memos he exchanged with the other directors and finance managers and therefore show that he communicated with the other stakeholders during the entire decision-making process. If Roger presents all the facts intelligently and coherently, he is likely to be absolved all of all the charges since he acted in the best interests of the company.

References

Clark, R. B. (2017). Management: Duties and Liabilities Of Directors And Controlling Shareholders. Ballantine and Sterling California Corporation Laws, 1.

Knepper, W. E., Bailey, D. A., Bowman, K. B., Eblin, R. L., & Lane, R. S. (2016). Duty of Loyalty (Vol. 1). Liability of Corporate Officers and Directors.