No u-turn on directors' duties

The government has flatly refused to scrap the codification of directors’
duties in the company law reform bill, despite fears that it could lead to
increased litigation.

Attorney general Lord Goldsmith proposed changes to the original bill to
enhance the power of the courts to throw out cases where there was no prima
facie evidence of a breach of duty in support of ‘derivative claims’.

The bill contains a list of issues that directors seeking to fulfil their
duty to promote the success of their company ‘must (so far as reasonably
practicable) have regard’.
Goldsmith insisted: ‘There is nothing new in this. What is the problem? There
are not six duties. There is one duty, which includes having regard to factors
to which companies already give regard.’

He denied directors would have to maintain expensive audit trails
to show they had considered all the issues.

‘We have tried to steer a constructive course between those who want more
onerous duties to be placed on directors and those who wish there to be no
duties at all,’ he added.

Tory peer Lord Freeman demanded the government drop the list and limit the
bill to state ‘only that a company director must act in good faith in what he
considers to be the interests of the company’.