The Role of Artificial Intelligence in Boardroom Decisions: Fiduciary Duties and Liability

The use of intelligence has undergone a significant transformation in recent years. It is no longer a tool solely for analysis but has assumed a role in the boardroom. This development presents a legal challenge for corporate law. Business leaders can access a wealth of information from intelligence that is not available through their own intuition. However, the use of artificial intelligence also raises questions regarding legal responsibility and accountability. This paper examines whether corporate boards can utilize intelligence to make decisions without transparency regarding the decision-making process. It assesses whether this practice is lawful or constitutes a legal issue. The research focuses on the duty of care and independent judgement required by Section 166 of the Companies Act 2013. It analyses specific rules from 2026, particularly the SEBI rules, and compares them to the EU AI Act. The study concludes that company directors who heavily rely on artificial intelligence do not receive the same legal protection as they would under normal circumstances. This is because the reasons behind decisions are often unclear, complicating the determination of responsibility and potentially leading to legal issues. The research advocates for a mechanism to oversee the use of artificial intelligence and emphasizes the legal responsibility of human directors. The conclusion provides a strategic roadmap for boards to adopt a ‘Human-in-the-loop’ mandate, ensuring that while AI may process data, the legal responsibility for decisions remains firmly with the human director.