PracticeConsultingIoD gives law review lukewarm welcome

IoD gives law review lukewarm welcome

The Institute of Directors yesterday gave a lukewarm welcome to the proposals to modernise company law, but praised the 'large measure of freedom' it proposed in the field of corporate governance.

Included in the company law review proposals is a recommendation to ensure that company directors’ duties are clearly defined. The idea is to give directors a clear statement of their responsibilities, bringing together over 250 years of court decisions.

The IoD said: ‘We see merit in seeking to bring about some clarification of directors’ duties, recognising the need for directors to take into account a wide variety of factors and interests in order to achieve company success for the collective benefit of shareholders.’

However, the continued freedom allowed to directors is expected, according to the IoD, to be countered by the pressure placed on them by shareholders to ensure ‘that this freedom is not abused’.

Lord Newton, head of the IoD’s professional standards department, said: ‘While there is much detail here which we will need to examine with care, we very much welcome the basic thrust. In particular, we warmly endorse the principles of ‘Think Small First’.

‘We also welcome the idea of some clarification of directors’ duties, the emphasis of flexibility and transparency rather than over-regulation, and the aim of achieving mechanisms which can in future make it easier for the law to be kept up-to-date.’

The Company Law steering group’s proposals also included recommendations for better disclosure on the training and qualifications of their directors.

Links

Call for directors’ duties statement

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