How to ensure due diligence when AI is making the decisions

AI has several notable advantages over the human mind, especially when it comes to the ability to retain and recall vast quantities of information and to make decisions and give advice unaffected by biases and emotions. An analysis of the relevant sections of the Companies Act led us to conclude in the previous article that, as the law stands, there is nothing to prevent a company from legislating, in its memorandum of incorporation or a shareholders' agreement, that an AI system must be consulted before a final decision is made by the board. However, the directors cannot abrogate their duty to become fully informed about corporate affairs, apply their own minds and exercise their discretion in the best interests of the company. Given the nature of AI, this issue must also be addressed if a company requires the directors to rely on AI in making decisions. Since well before the advent of the latest generation of AI, company boards have been relying on information collected, stored and processed electronically when making decisions.