The UK Government is updating the new Companies Act and these changes to directors duties became law on 1st October 2007.

The Government’s objectives are to enhance the long tern investment culture and ensure better regulation in companies.

If you are a director or advising directors you will need to know about these important duties. These are in addition to your day to day functional duties. They apply to executive and non-executive directors alike.

The new law applies 7 new duties to your role as director. These are:

* A duty to promote the SUCCESS of the company for the benefit of its shareholders. This is an interesting area! See my comments below

* A duty to exercise independent judgment

* A duty to exercise reasonable care, skill and diligence

* A duty to avoid conflicts of interest – any independent directors may authorize a conflict of interest

* A duty not to accept bribes from third parties – unless the benefit received cannot reasonably be expected to give rise to a conflict

* A duty to disclose any interest in any proposed transaction or arrangement with the company

* A duty to act within the powers of the company’s constitution ie articles of association.

What does success of the company mean?

The new law requires you to take into account the following factors:

* The need to foster business relationships with suppliers, customers and others
* The impact of the company’s operations on the community and environment
* The long term consequences of any decision
* The interests of the company’s employees
* The desirability of maintaining a reputation for high standards of business conduct
* The need to act fairly between shareholders

What you should do next:

* Ensure your fellow directors are properly briefed - circulate this note to them! (Listing up the new duties visually at the next few board meetings will get the message across quicker)

* Contact us at www.theleagalpartners.co.uk if you need more information, clarification or if a few examples would help, if you have any concerns about the above or wish to discuss in more detail what the new duties mean for you in practice.

* Ensure you have directors’ and officers’ liability insurance in place – The Legal Partners can help you organise this cover

* Ensure any board papers make reference to the factors listed above when making important decisions and your board minutes reflect this.

* Insert these 7 new duties into new directors’ terms of appointment

* Include these duties as a part of your company’s corporate governance training for directors

* Review your company’s human resources, ethics, compliance and corporate responsibility policies in the light of these new duties.

We are sure this will help you.

Thanks Richard