Directors Legal Duties Corporate Law Basics
For information and business law advice on the legal aspects of duties that directors owe to their companies, you have come to the right place. It is essential for those operating and managing corporations to understand their obligations because their impact on corporate dealings could be severe in the event of a failure to comply with legal obligations. These duties are relevant to anybody who is either an owner or manager of a company be it a small to medium enterprise or indeed the larger corporations.
Codification of Directors Duties Corporate Governance
English business law has codified the corporate governance function insofar as the obligations of company directors are concerned by virtue of the Companies Act 2006. The previous position was developed by judges under common law.
Distinguished Duties of Company Directors
Questions are raised whether the rules concerning corporate governance ought to be one and the same irrespective of the sizes and types of corporations. There is though one distinguishing feature. The legal duties of company directors who may wish to procure finance to carry out the objectives of their corporations ought to have greater accountability through corporate governance placed upon their shoulders. Conversely private limited companies such as your local builder, estate agent, plumber, solicitor etc. are usually small to medium enterprises or owner managed companies.
Purpose – The purpose of this paper is to provide an easy-to-read article on corporate law for academics, lawyers, directors and those advising directors on their duties, to be able to gain an appreciation of the duties that directors owe to their companies in light of the Companies Act 2006, the Corporate Manslaughter and Corporate Homicide Act, 2007 and the Bribery Act 2010.
Design/methodology/approach – Using a range of cases from business law and statutory materials, as well as published works, including material from the Financial Reporting Council, the Institute of Directors and the Health and Safety Executive, the paper aims to provide practical advice (as opposed to merely academic listing) on the broader corporate law of directors’ duties.
Findings – It has been noted that there are not enough resources which combine the three aspects of corporate law that impact upon directors’ duties.
Research limitations/implications – The paper focuses on directors’ duties for private limited companies within business law relating to England and Wales, specifically the Companies Act 2006, the Corporate Manslaughter and Corporate Homicide Act, 2007 and the Bribery Act. The implications are that corporations wishing to conduct business outside of the UK would need to look elsewhere for guidance. Conversely, UK-based corporations seeking to conduct business internationally will need to be aware of not just the legal obligations of directors but also the potential conduct of those authorised to act on behalf of directors abroad, particularly in the context of the Bribery Act 2010.
Practical implications – The paper is an easy-to-read, useful source of impartial information for academics, lawyers directors and those providing business law advice to directors to gain an understanding of corporate law.
Originality/value – The paper brings together three different areas of legal practice into one, as they have a significant impact upon businesses and appear not to have been addressed previously in such a manner.
The focus of the articles in the coming weeks will be on the duties that such directors owe to their companies looking at best practice to ensure good corporate governance.