Guides to Company, Corporate & Commercial Law, Business Law

Jane Sachedina

Testimonial

“Jane’s ability to ‘think outside the box’ and offer creative, yet workable solutions is the key to our professional relationship. A professional tax advisor, I’ve known Jane for many years and refer my clients to her on all aspects of business law issues. Quite frankly, it’s easy to recommend Jane’s services; she knows her stuff inside out, has a great attitude and finds solutions that few others will spot. With Jane, ‘a spade is a spade’, but there’s more than one way to dig a hole – we like that and so do our clients.”

Chelle Thirsk, CGA

You're a director - so what?

Being a director of a company is a serious matter and it is, therefore, important that you have some understanding of your basic legal duties.

Your duties as a director are set out in the Companies Act 2006, which states that, as a director, you must comply with these duties and if you do not then there are actions that can be taken against you by the company. Also under the laws relating to insolvent companies, if you act in an inappropriate way you could find yourself being personally liable for losses of the company.

Under the Companies Act 2006 your duties are:

To act within your powers.
To promote the success of the company.
To exercise independent judgement.
To exercise reasonable care, skill and diligence.
To avoid conflicts of interest.
Not to accept benefits from third parties.
To declare an interest in any proposed transaction or arrangement which involves the company.

Wide ranging and complex, you should always take the advice of your business law solicitor if you have any doubts as to whether your actions might cause you to be in breach of these duties in any way.

Being a non-executive director – do I really have to take it seriously?

In short, “Yes”. If you are asked to become a non-executive director then, before you accept, you must make sure that you:

Only take on the appointment if you have sufficient time and the right level of skill to devote to the position.
Are able to attend all board meetings.
Keep an accurate record of your dealings with the board (both inside and outside board meetings), the directors individually and employees.
Fully understand the risks that the business has to face and make sure that there are enough proper checks and balances to monitor and manage these risks.
Request and are given as much training and induction as you think necessary to make sure that you understand the business.
Fully appreciate that it is your job to be independent and questioning of the other directors and to be unafraid to challenge other board members especially when it comes to risk management and application of the business model and culture.