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Who would be a director?
Burdens on Directors increase annually. Has your insurance responded accordingly?
It’s hard to keep pace with the ever increasing burdens and responsibilities being placed on company directors in recent years, either legislative or changes in popular expectations.
The most recent, and far reaching, piece of legislation is the Companies Act 2006 which introduces major changes to director’s duties and shareholders rights. In particular, echoing the popular concern of the moment, the act raises the ‘environmental risks bar’ which, in essence, requires:-
- directors to promote ‘enlightened shareholder value’, one important factor in that directors must consider the impact of the company’s operations on the community and the environment; a clear audit trail must be established to justify business decisions taken – quoted companies must carry out “forward looking reporting” including specific reference to the impact the company’s business will have on the environment.
- the act has also made it much easier, and likely, for shareholder derivative actions to be brought and opens the door for public interest groups to invest in a company with the sole purpose of bringing an action. It also increases cross-border liabilities and the likelihood of derivative actions which are much easier to bring abroad, particularly in the US.