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The Companies Act 2006 provides a statutory statement of Directors’ duties. A Director who is in breach of their duty is personally liable to compensate the company for any loss suffered as a result of the breach. In some circumstances, a Director may be liable to disqualification under the Company Directors Disqualification Act 1986.
It's important that Directors understand their responsibilities and potential liabilities under the Act. Our Regulatory Compliance & Defence Solicitors can advise Directors and provide legal representation in any application to disqualify.
Companies Act 2006 General Duties include:
• A duty to act within powers, as contained in the company’s memorandum and articles of association, and to only exercise their powers for the purposes for which they are intended
• A duty to promote the success of the company, by acting for the benefit of its members as a whole
• A duty to exercise independent judgment
• A duty to exercise reasonable care, skill and diligence. If a Director has specialist skills or knowledge, this is taken into account when considering the onus of the duty
• A duty to avoid conflicts of interest, which means that any potential conflict should be disclosed immediately so the conflict can be removed or authority can be given for the conflict
• A duty not to accept benefits from third parties, if the benefit is regarded as likely to give rise to a conflict of interest.
In some instances, a Director’s liability under the Act remains even after they cease to be a Director and all of the duties apply to non-executive and shadow directors, as well as Executive Directors.
Slater and Gordon Lawyers offer expert advice and can provide immediate legal representation anywhere in the UK.
Call our Regulatory Compliance Solicitors on freephone 0808 175 7723 or contact us online.
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