Directors can be personally liable for their conduct or if they breach certain rules and regulations imposed by English and EU law.
These liabilities can range from the risk inherent in personal guarantees and warranties of authority to legislation directly relating to directors’ duties (such as the ‘best interests of the company’ requirements in section 172 of the Companies Act 2006), bribery, financial services, corporate manslaughter, employees and the environment.
The government’s campaign to galvanise corporate governance requirements is set to expand the personal liability of directors. For example:
- fines of up to £500,000 per director for companies engaged in excessive nuisance calls
- legal action to hold company directors to account regarding their full range of duties, with new proposals to include:
- company reports on how directors have complied with their duty to promote the success of the company
- company reports on how boards ‘have regard’ for stakeholder interests (such as employees, the local community and environment)
- company reports to shareholders exposing any failings of the board
- company adherence to corporate governance codes (which the government proposes to make mandatory and also apply to private companies)
If you are a director and you are unsure of your personal risk exposure to existing and forthcoming corporate governance requirements Spring Law can advise you – please contact us