Director duties mapping for international holding structures

Director duties mapping is the exercise of setting out, jurisdiction by jurisdiction, exactly what a director on a group's board must do, when they must do it, and what follows if they do not. For a holding structure with subsidiaries or branch boards in more than one country, the duties attaching to a board seat are rarely uniform, and a director who assumes otherwise is exposed the moment a filing is missed or a resolution is signed without the authority to sign it. The output is a single reference the group can hand to every board it appoints, updated as the structure changes rather than rebuilt each time a question arises.

A parent company incorporated in one jurisdiction typically appoints local directors to subsidiary boards in two or three others, often without asking what those individuals are separately required to do under the law of the country where they actually sit. The gap surfaces later, usually at an audit, a refinancing, or the moment a director resigns and asks precisely what they had signed up for. By then the question is no longer theoretical, and the answer is harder to construct after the fact than before it.

What follows sets out when this work becomes necessary, what it produces and in what order, and where the advisory boundary sits once the mapping is complete.

The situation this work addresses

Groups rarely discover a gap in director duties mapping through planning. They discover it through an event: a subsidiary board approves a related-party transaction that the parent assumed required head-office sign-off, or a director who also sits on two other boards in the group realises the conflict-of-interest rule in one jurisdiction is stricter than the one they know from another. The board of directors of a holding company and the boards of its subsidiaries are rarely subject to the same standard of care, the same disclosure duty, or the same test for what counts as a conflict, and treating them as interchangeable is the single most common source of exposure in a cross-border structure.

The same gap appears when a beneficial owner sits on an operating board personally rather than through a nominee they control, and assumes the fiduciary standard they know from their home jurisdiction travels with them. It does not travel automatically. Duties are set by the law of the company, not the nationality of the director, and a director who has held seats in several countries for years can still be operating on an incorrect assumption about at least one of them.

Director duties mapping addresses this before it becomes a dispute, an audit finding, or a resignation letter that asks questions the group cannot yet answer. Related work on protecting an outgoing director covers what happens once someone has already left; this page covers the work that should have happened first.

What triggers it and why the timing matters

Three events reliably trigger a request for this work. A group is restructuring and adding or removing a layer of holding companies, which changes which board approves what. A new director is being appointed to a board they have not previously sat on, and the group wants to know what they are agreeing to before the appointment letter is signed. Or an existing director has raised a question the company secretary could not answer with confidence, which is itself a signal that the mapping has never been done properly.

A director who signs a board resolution outside the authority the constitutional documents actually give the board becomes personally exposed to that decision at the moment of signature, not when a problem later surfaces, and the exposure does not wait for the transaction to close. Personal liability attaches on the act, not on the outcome. That timing is the reason mapping is commissioned before an appointment or a transaction, not after.

For a review of a structure that has been left unexamined for some years, reviewing a legacy structure that has not been checked recently sets out how the same gap tends to compound the longer it is left, and how a mapping exercise commissioned late still has to answer questions about decisions already taken. The specific facts of the group determine how much of the earlier record can still be tested; the exercise itself does not change with age, only its difficulty does.

What director duties mapping produces, in sequence

The work is sequenced so that each stage is usable on its own, in case the group needs the output before the whole exercise is finished.

• A duties matrix, jurisdiction by jurisdiction, setting out the standard of care, the duty of loyalty, the conflict rule and the statutory filing obligations attaching to each board seat in the structure.
• A marked-up set of constitutional documents for each entity, showing where the board's authority is limited and where a decision requires shareholder approval rather than board approval alone.
• A board pack summarising, per entity, what each director is individually responsible for signing, filing or disclosing, and by when.
• An escalation note flagging where a director's exposure sits above the level the group's own governance assumed, so the point can be corrected before an appointment is confirmed.

The last artefact is deliberately narrow. It does not restate the whole exercise; it lists only the points where what the group assumed and what the law actually requires diverge, because that is the part a board member will read in full and the rest will only skim.

Where this differs by jurisdiction

The differences that matter are rarely the ones that make headlines. Whether a director owes a fiduciary duty to the company alone or to the group as a whole; whether a non-executive is held to the same standard as an executive; whether a duty of disclosure is owed to the board, to the shareholders, or to a regulator directly; and what becomes visible on a public register once a director is appointed or resigns – these vary between common-law jurisdictions and civil-law jurisdictions, and they vary again within each of those families. A comparison such as how director liability compares between Cyprus and Hong Kong illustrates how far apart two jurisdictions with a broadly similar commercial reputation can sit on this point.

A director appointed to a board in a jurisdiction with a strict disclosure duty can be personally liable for a failure to disclose a conflict that would not even meet the threshold for disclosure in the jurisdiction where the parent sits, and that liability does not wait for the group's own governance policy to catch up with the local rule. Mapping is what closes that gap before an appointment, rather than after a regulator or a liquidator finds it.

Some jurisdictions also restrict what the constitution itself can say – for example, how far a company's articles can go in restricting the transfer of shares, which in turn affects how a board can be structured and replaced. How articles can restrict share transfers under Belgian company law is one instance of a constitutional constraint that changes what a board is actually free to decide, independent of anything the directors themselves intend.

Coverage across the jurisdictions in a given structure is confirmed case by case, at the outset of the engagement, against the specific board seats the group holds; a mapping exercise commissioned for a three-jurisdiction group does not extend by assumption to a fourth added later.

What this service does not include

This engagement does not include acting as a director, secretary, nominee shareholder or trustee for the group, and it does not include supplying, sourcing or introducing anyone to fill any of those roles. It does not include any activity for which a trust or corporate service provider licence is required. This is not a matter of scope preference; it reflects the licensing position that applies to advisory work of this kind, and treating it otherwise would put the group's own governance at greater risk, not less.

What the client receives instead is the requirement mapped against the group's actual structure, the authority limits in each constitution set out in plain terms, the appointment terms of each existing or proposed director reviewed against what the role in that jurisdiction actually demands, and the exposure of each seat assessed and ranked. A group that needs a person to fill a board seat, or a registered agent, or a company secretary, is directed to a separately licensed provider; this engagement identifies the need and confirms the standard the appointee must meet, and stops there.

• Does not include appointing, supplying or arranging any director, secretary, nominee or trustee.
• Does not include any trust or corporate service provider licensed activity.
• Does include the duties matrix, the marked-up constitutions, the board pack and the exposure assessment set out above.

Bridge: a board that is being restructured this quarter cannot wait for a licensing question to be resolved before the appointment letters go out. Confirming what each director in the new structure is actually agreeing to, before the letters are signed, is the part of this work that has to happen on the group's own timetable.

Assess your director exposure. Write to info@hreithlaw.com with the jurisdiction and the structure.

Frequently asked questions

Who inside the company is responsible for director duties mapping?

The board as a whole commissions it, but the output is addressed to each director individually, because the duties and the exposure attaching to a seat are personal to the person holding it, not shared across the board as a single obligation.

What evidence should the board keep on director duties mapping?

The duties matrix, the marked-up constitutions and the exposure assessment should be kept as a dated record, and reissued rather than edited in place whenever a jurisdiction is added or a constitution is amended, so the group can show which version applied to which appointment.

What happens if director duties mapping is not addressed?

Nothing happens immediately, which is precisely the risk. The gap remains invisible until a specific event tests it, such as a related-party transaction, a resignation, or a regulator's enquiry, and by then the director's exposure has usually already crystallised rather than being something that can still be corrected in advance.

How often should director duties mapping be reviewed?

It should be revisited whenever the structure changes: a jurisdiction is added, a holding layer is inserted or removed, or a constitution is amended in a way that shifts where a decision has to be approved. Outside those events, an annual check against the existing matrix is usually sufficient.

Does director duties mapping change for a foreign-owned company?

The duties themselves are set by the law of the company, not by the nationality of its owner, so foreign ownership does not itself change the mapping. It does often change how carefully the exercise has to check for local rules the parent's own board is unfamiliar with, since that is where the assumption gap tends to be widest.

Johan Reinholt, Partner, Director Duties. Johan advises boards of cross-border holding structures on where director duties diverge between the jurisdictions a group actually operates in, with a particular focus on conflict-of-interest rules and constitutional authority limits. He works from the constitution outward, treating the governing document of each entity as the starting point for what a director is and is not free to do. He does not appear as director, secretary or nominee on any structure he advises.