There has been a growing call for greater accountability and transparency from companies, and the onus of that obligation rests with their directors.
As a result of this burden of responsibility, directors are exposed to more liability than ever before. Whilst a majority of directors should already be aware of their duties, as outlined in the Companies Act 2006, there are additional obligations they need to follow to avoid penalties, disqualification from serving as a director or even imprisonment. These necessary supplemental responsibilities include the following:
- Financial Services and Markets Act 2000 and Financial Services Act 2012: Both deal with the abuse of confidential inside information in connection with the company’s finances. For example, if a director were to disclose false or misleading financial information.
- Fraud Act 2006: Knowingly making an untrue or misleading representation, or purposely failing to sisclose legally required information.
- Bribery Act 2010: Offering, promising or giving a bribe; requesting, agreeing to receive or accepting a bribe; bribing a foreign public official to obtain or retain business; and failure to prevent bribery.
- Equality Act 2010: Discrimination (direct or indirect), harassment or victimisation due to a
person’s age, gender, sexual orientation, race, religion or belief.
- Environmental legislation: An environmental offence that occurs due to neglect or explicit consent.
- Data Protection Act 1998: Knowingly or recklessly obtaining, disclosing or procuring private information without the owner’s consent.
With such a considerable number of obligations to fulfil, it would be prudent of your company to protect itself from potential fines and penalties with directors’ and officers’ liability insurance. This type of cover protects against breach of trust and duty, neglect, error, misleading statements and wrongful trading. If you need further information on this