Companies Act Section 378T — Liability of directors
CHAPTER XXI
Commercial / Corporate
Summary
Sub-section (1) says that if directors vote for a resolution, or approve in any other way, something that goes against the provisions of this Act, any other current law, or the company's articles, then all the directors who did so are jointly and severally liable. This means each of them can be held responsible, together or individually, to make good any loss or damage the Producer Company suffers because of that contravention.
Sub-section (2) gives the Producer Company the right to recover from a director, without affecting the rights under sub-section (1), two specific amounts. Under clause (a), if the director made any profit as a result of the contravention mentioned in sub-section (1), the company can recover an amount equal to that profit. Under clause (b), if the Producer Company incurred a loss or damage as a result of the same contravention, the company can recover an amount equal to that loss or damage.
Sub-section (3) clarifies that the liability set out in this section is in addition to, and does not reduce or replace, any other liability a director may have under this Act or any other current law.
Official Text
(1) When the directors vote for a resolution, or approve by any other means, anything done in contravention of the provisions of this Act or any other law for the time being in force or articles, they shall be jointly and severally liable to make good any loss or damage suffered by the Producer Company.
(2) Without prejudice to the provisions contained in sub-section (1), the Producer Company shall have the right to recover from its director—
(a) where such director has made any profit as a result of the contravention specified in sub-section (1), an amount equal to the profit so made;
(b) where the Producer Company incurred a loss or damage as a result of the contravention specified in sub-section (1), an amount equal to that loss or damage.
(3) The liability imposed under this section shall be in addition to and not in derogation of a liability imposed on a director under this Act or any other law for the time being in force.