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Directors Duties
Not many directors fully understand their duties, how to discharge those duties and the consequences for them personally, collectively and for the company should those duties not be properly discharged.
Strategic Advice
All executive and non-executive directors are aware of the importance of corporate governance and how that influences the running of companies, however, not many directors fully understand their duties, how to discharge those duties and the consequences for them personally, collectively and for the company should those duties not be properly discharged.
The Companies Act 2006
Directors duties arise from either common law or are now enshrined in statute under the Companies Act 2006. In addition to these general duties there are further statutory obligations that impose criminal and civil liability on directors including matters relating to insolvency, health and safety, environmental, competition and securities. The list is extensive and demonstrates that the knowledge expected of directors is broad ranging.
To add to this, the standard expected of directors is that they must display the knowledge, skill and experience based on an objective test. Where a director has specialist knowledge, a higher subjective standard must be met.
Liability
Directors may be relieved of their liability by indemnities or insurance but all prudent directors will take every reasonable step to prevent liability arising in the first place. Liability too is broad ranging starting with liability to the company itself, in some situations the shareholders and third parties and of course, the company’s employees and workers.
Having an effective board that has the appropriate balance of skills, experience, knowledge, diversity and independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively is key. An effective board needs to ensure there are succession and development plans, appropriate remuneration, board evaluation of the effectiveness of individual directors and processes f or identifying and reviewing risks.
This is where we can, as a full-service law firm, work with your board to ensure that all your corporate governance issues are dealt with holistically – where our employment specialists work with our corporate and regulatory specialists to ensure that the legal and strategic advice, and practical guidance and know-how, are fed into your strategic objectives and aims.
Your Contacts
Kirsty Rogers
National Head of Employment & Pensions
DD +44 (0)161 603 5094
M +44 (0)7808 975 877
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