Non-executive directors who fail to inform themselves about a company's affairs and rely entirely on the managing director breach their duty of care under s 232(4) and at common law, regardless of their understanding that they would be 'sleeping partners'. However, breach of duty alone is insufficient — the liquidator must also prove insolvency (assessed as a matter of commercial reality including access to external financial support) and that the breach caused the loss. Where an experienced insolvency practitioner would have recommended continued trading, it is difficult to establish that the directors' failure to act caused the company's losses.
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