Published on Mar 05, 2024
Directors of companies hold a position of trust and responsibility. Understanding and fulfilling the duties that come with the role is paramount.
Factors including geo-political and economic uncertainty, increased levels of stakeholder expectation, technological, regulatory and legal changes when taken together place even greater challenges upon Directors and their organisations.
In the year to September 2023, one in 191 active companies in the UK entered insolvent liquidation; as a director it is even more important than ever to understand your duties and liabilities both to protect yourself and to place your organisation in the best place to reduce the impact of companies that you work with stuggling.
Companies can implement strong governance structures and support mechanisms to assist Directors in meeting their obligations. By embracing these structures and responsibilities, directors contribute not only to the success of their company but also to the broader business landscape, fostering trust and sustainability in the corporate world.
The realm of corporate governance is a dynamic area and one which Director’s need to stay up to date with to successfully steer their corporate ship.
Much of the UK Corporate Governance code is focused upon large organisations; their need to comply can place increased expectations upon other organisations in their supply chain and potentially act as a blockage to trade with them. Understanding some of these expectations can help your organisation to ‘qualify’ for work with them and increase your credibility.
Director’s must act in accordance with the company constitution and in a way that promotes the success of the company for the benefit of the shareholders. They should always consider the long-term ramifications of their decisions in relation to employees, business relationships, the community and the environment as a whole.
Many people do not realise that the roles and obligations of shareholders and directors are not the same, so it is important to understand how and why these differ and what this means to directors that are also shareholders.
Director’s must exercise their independent judgement and bring a reasonable level of care, skill, and diligence to the Boardroom. They have a duty to avoid situations where their personal interests may conflict with those of the company, and they are prohibited from accepting benefits from third parties offered in connection with their position.
Breach of duty may lead to legal action and Director’s can be found personally liable. This liability can extend to financial penalties or being disqualified as a Director. If the offence is criminal, such as fraudulent trading or breaches of health and safety regulations, Director’s may face criminal charges.
Staying informed about changes in legislation and seeking legal advice when needed are essential practices for all Directors.
As part of your continuous training to stay up to date with your role and duties as a Director you can attend our one-day Understanding Director’s Duties, Responsibilities and Liabilities course. The expert trainer will give you a thorough insight into your responsibilities so you can make a positive impact on your organisation.
Published on Mar 05, 2024 by Gareth Cartman