Legal Updates

Commercial Law – ICSA Guidance Note – Company Law - Directors’  Duties and Liabilities

The Institute of Chartered Secretaries and Administrators (“the ICSA”) has recently issued a Guidance Note on Directors' Duties. The ICSA periodically publish new guidance notes on directors' duties in order to provide guidance to directors of companies on their new general duties. It should be noted that there has been an implementation of a number of new directors’ duties resulting from the Companies Act 2006.

There is now an onus on directors to:

§   Avoid conflicts of interest;

§   Declare any interest in a proposed transaction or arrangement; and

§   Refuse benefits from third parties.

It is interesting to note that these general duties are owed to the company rather than its shareholders. Furthermore, there are civil consequences if they are breached. This means that companies should pay particular attention to the new rules as outlined in s.183 of the Companies Act 2006 which provide for criminal sanctions if their directors fail to comply with the requirements on declarations of interest.

According to commentators at the ICSA:

“In relation to directors' duties the Act has generally codified common law and equitable principles which directors should already be aware of. However, some aspects depart from previous law and require new or revised practices and standards to be exercised. This guidance note will assist company secretaries and directors in ensuring compliance with the Act and focus attention on the decision making process”.

A number of ICSA guidance notes can be found here: http://www.icsa.org.uk/

Please contact us for more information on assessing damages due under termination of a contract at enquiries@rtcoopers.com

Visit http://www.rtcoopers.com/practice_corporatecommercial.php

© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

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