Over recent years, company directors have come under increasing scrutiny and pressure to embed best practice and instil a culture of good corporate governance across the UK corporate universe. There has been a renewed focus on the duties that directors owe to their company to ensure that they act in a proper, honest and open way, particularly in the light of a number of high-profile corporate failures.
There has also been particular attention given to ESG factors (environment, social and governance) and how directors can and should reflect these in their operational and strategic management of companies.
The Chartered Governance Institute (ICSA) has published helpful new guidance for directors of both public and private companies, which is aimed at providing practical advice to enable directors to comply with their Companies Act duties. It discusses each of the statutory directors’ duties (with the most focus being on the duty at s172 Companies Act 2006, being the duty to promote the success of the company for the benefit of its members as a whole – which ICSA describes as the ‘overriding duty’). This includes guidance as to how to implement the ESG factors which s172 sets out (including the need to act in the interests of the company’s employees and to consider the impact of the company’s operations on the community and environment).
The guidance note can be found here (ICSA subscription required): https://www.icsa.org.uk/knowledge/resources/directors-general-duties
For further information on directors’ duties, please click here, and click here for guidance on corporate governance during the COVID-19 pandemic. Alternatively, please contact the Burges Salmon Corporate team who will be able to assist with any queries you may have on directors’ duties.
Written by Gregory Nash.