ALGORITHMIC CORPORATE GOVERNANCE AND DIRECTORS’ FIDUCIARY DUTIES

Abstract

AI is not just disrupting industries; it is reshaping governance. The fiduciary duties of directors require them to act in the best interests of the company and the shareholders they serve. Using AI to carry out governance responsibilities introduces complexity and risks that the legal framework on company management is yet to contemplate. This paper examined algorithmic corporate governance and directors' fiduciary duties and found that the introduction of algorithmic corporate governance has expanded the duty of care of directors and intensified their oversight function instead of diluting their liability. A doctrinal approach of research is adopted by examining statutes, case laws, and existing literature on the topic. This paper recommends, among others, the amendment of the Companies and Allied Matters Act 2020 to clarify technological reliance on board decisions and expand traditional models of oversight to address the unique characteristics of algorithmic systems. It recommends the creation of an AI audit committee on a board level and vigorous training of directors on proper governance where AI is deployed.