Directors’ right to seek external professional advice

Wednesday, 01 January 2020

Generally, boards make decisions on behalf of organisations by resolutions passed at duly convened meetings of the board or by circular resolutions in writing of all directors.

Also, generally, individual non-executive directors do not have legislative or constitutional authority on their own initiative to commit the organisation to a contract, including one to provide professional advice to the director on matters relating to their board service.

Organisations, whether on the initiative of management or by board resolution, often take external professional or consultancy advice on matters under consideration by the organisation and/or its board. That advice may be for the benefit of the organisation generally, or even only for the benefit of the board discretely from management; for example, in the performance of its oversight role of management, the board may need advice independent of any affiliation with management.

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