Management statutory duties

The board and management of a company (the executive bodies) have a legal and moral obligation to organise and control the company in such a way that violation of the law is avoided. If the accountable executive body violates this obligation, they and the staff who directly caused the damage are potentially personally liable (the so-called 'organisational fault'). The only way to minimise personal liability, other than taking out directors and officers insurance, is to have a legally-compliant organisation of a company, including proper documentation.

Proof is particularly powerful if there is written documentation of the operational structure of the company. Arguments against written documentation such as lack of time, too much effort or cost are neither valid nor accepted. Legally speaking, the obligation to document cannot be waived even in negative cost-benefit analysis. An essential part of any ISO quality management is that the responsibilities and decision-making powers of employees are clearly defined.   Delegation from one person to another is part of the organisational duties of executive bodies. The administrative, organisational and legal duties of the executive bodies themselves cannot be delegated.

The first step towards organising a company is to create departments and assign the relevant corporate obligations to them. To fulfil these obligations, clear accountabilities and decision-making authorities need to be agreed. It is part of ISO quality management that the organisation of the business, individual areas of responsibility and the decision-making powers of employees are clearly defined. Hence, comprehensive but simple delegation of authorities is vital to the governance, control and success of any business.