Reforms of directors’ liability welcomed by CIMA

The proposed new clause of the Company Law Reform Bill, laid before
parliament on 3 May, which limits directors’ liability to statements made in bad
faith or recklessly has been welcomed by the Chartered Institute of Management

CIMA chief executive Charles Tilley said the proposal was ‘the silver lining
in the decision to abolish the statutory operating and financial review’ as it
provided the opportunity to revisit the issue of director’s liability for
forward-looking statements. 
‘Individually, and collectively with other concerned bodies, CIMA has made its
concerns known to the Department for Trade and Industry, asking that UK company
law be amended so that directors should not be penalised for statements made in
good faith which are not reckless,’ Tilly commented.

The new clause states that a director is only liable for misleading or
dishonest statements, and includes their responsibility to consider whether
information is misleading or dishonest. 

CIMA was one of the signatories of a letter to the DTI in March 2006, calling
for greater protection for statements made in good faith, to enable transparent,
meaningful reporting.

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