Director Duties and Liability in Asia and Offshore Structures: Why You Can’t Outsource Judgement
Directors face personal liability for decisions they don’t understand. Learn the three traps that catch even experienced leaders—and how to avoid them.
Disclaimer: This post is a personal reflection and does not constitute legal advice. Every situation is different — if you need legal advice, speak to a qualified lawyer.
I’ve spent two decades advising founders, funds and in‑house teams on structures spanning Asia, Cayman, BVI, Bermuda and Jersey. The legal advice is usually fine. The real risk comes from directors signing documents they don’t understand because “the service provider handles it.”
That excuse has never worked. Directors are personally liable.
It doesn’t matter where your company is incorporated or how “standard” the structure looks. Your duties as a director are personal and enforceable. They don’t disappear because you’re busy, offshore, or relying on a corporate services provider.
The Legal Baseline
Across common‑law jurisdictions, the core duties barely change:
- Act in the best interests of the company — not yourself, not the parent, not the fund manager.
- Exercise care, skill and diligence — applying the judgement of a reasonably competent person in your position.
- Avoid conflicts of interest — including the quiet, convenient kind that arise when you rubber‑stamp decisions you don’t understand.
These duties follow you, not the company’s registered office.
Where Directors Get Into Trouble
After years of watching the same patterns repeat, I’ve noticed three recurring themes:
1. The “Standard Document” Trap
A service provider or law firm sends you minutes or resolutions. They look familiar — you’ve seen them a hundred times. Everyone signs them. You sign them too.
But you couldn’t explain, in your own words, what decision you just approved or why it mattered.
“Standard” does not mean “safe.” It means “someone used this before.” That’s all.
The test: If a regulator, auditor or investor asked why you approved the decision, could you answer clearly without reading from the document?
2. The Rubber Stamp
On paper, the board is making decisions. In reality, the fund manager, parent company or sponsor is calling the shots. You’re just adding the signature.
Courts don’t care who was “really” in charge. If your name is on the resolution, you own the decision.
The test: Did the board actually deliberate, or did you simply endorse someone else’s conclusion?
3. The Paper–Reality Gap
Your minutes say the board met, reviewed documents, discussed alternatives and reached an informed decision.
Your emails show no discussion. Your files show no understanding. Your calendar shows you were on a flight.
When challenged — by a regulator, shareholder or court — that gap between paper and reality destroys credibility and eliminates defences.
The test: Would your documents help you in court, or hurt you?
I’ve written more on this before — the gap between what boards record and what actually happens — in an earlier post on corporate governance mistakes. Worth revisiting if you recognise yourself in that pattern.
What Good Directors Actually Do
The best directors run a simple internal checklist before signing anything:
- Can I explain this decision in plain language? If not, pause.
- Do I understand the downside? If this goes wrong, who bears the loss?
- Is there real deliberation? Minutes should reflect genuine thought, not post‑hoc justification.
- Would my documents stand up in court? They should show understanding, alternatives considered, and a reasoned conclusion.
This isn’t bureaucracy. It’s self‑protection.
The Bottom Line
You can outsource administration. You can outsource drafting. You can outsource filings.
You cannot outsource your judgement.
Your jurisdiction doesn’t save you. Your service provider’s reputation doesn’t save you. The law holds you personally accountable for decisions made in your name.
This connects to a broader pattern I’ve seen. I’ve documented common director mistakes in BVI structures — many of which apply equally to Hong Kong and Singapore directors overseeing offshore vehicles.
If you’re a founder, fund manager or in‑house counsel working with multi‑jurisdictional structures, this is a conversation worth having with your board. The structures are useful. The risks are real. The liability is personal.
Disclaimer: This post is a personal reflection and does not constitute legal advice. Every situation is different — if you need legal advice, speak to a qualified lawyer.
