Question 1

Frankie and Geoffrey have been the directors of a bank for ten years. Both of them are also chartered certified accountants.

A month ago, they loaned the money of the bank to a person without checking and complying with statutory regulations applying to the loan. As a result, the bank cannot recover the loan and has suffered damages.

Required:

(a) In relation to Companies Ordinance (Cap 622), state the statutory standard of the duty of care and skill owed by directors to their company (word limit: 80).

(b) Explain whether Frankie and Geoffrey are liable for breaching the duty of care they owe to their company (word limit: 120).