Duties bound

The decision to accept a directorship should never be taken lightly as directors are subject to many legal duties and responsibilities. Indeed those duties are likely to become more onerous now that the long-awaited Companies Bill has received Royal Assent. Subject to certain transitional provisions, it is expected to come into full force by October 2008. The Companies Act 2006 not only restates and clarifies much of the current companies legislation but will also introduce reforms affecting directors, shareholders and company secretaries of private and public companies, both quoted and unquoted.

The Act will introduce a list of seven general duties to which all company directors must adhere. These are:

• To act within the powers of the company
• To promote the success of the company
• To exercise independent judgment
• To exercise reasonable care, skill and diligence
• To avoid conflicts of interest
• Not to accept benefits from third parties
• To declare an interest in proposed transactions with the company.

This new legislation will significantly change the statutory landscape in which company directors operate.

For further information or advice, please contact:

Kevin McCarthy
Tel +44 (0)20 7440 7465
kevin.mccarthy@mishcon.com