You need to understand your role within the company and the law relevant to that area, and to take an active approach to fulfilling your responsibilities. Never sit idly by, assuming that other directors can safely be left to manage the company's business. For example, you should insist on regular financial reports as to the company's situation and projections, and apply your mind to them when you receive them.
If you are not happy with the way the company is being run, you may wish to require a board meeting to discuss your concerns. Where you disagree with a decision, it is always a good idea to ensure that this is noted in the minutes of the meeting, together with your reasons. This can be particularly important if the company's financial situation is poor. If the company subsequently becomes unable to pay its debts, a liquidator or administrator must submit a report on the conduct of each director, which could lead to disqualification as a director and, in some instances, personal liability. You may even wish to keep a private record of events and decisions, and your part in them.
If you are concerned that things are not as they should be, take legal advice personally.
You may also want to consider whether it is worth having directors and officers liability insurance. Although this cannot protect you from legal action, it can, in certain circumstances, cover the costs of legal advice and damages awarded against you by a court. It can, in certain circumstances, and provided the articles of association give the necessary authority, be paid for by the company. Take advice.
