Our guide on directors’ duties: What it is and how to use it
In our experience, it’s no understatement to state that company directors’ awareness of their different duties and responsibilities under UK law varies hugely. This is entirely understandable. The rules and regulations they must follow are not always easy to understand – including even for those with a legal background – and change regularly over time. A breach is however a breach, and the consequences can be highly significant, carrying civil and criminal sanctions for both the directors and companies concerned.
To help enlighten new and existing board members about what they need to know, and to stay on the right side of the law, for the last decade we’ve produced a Green Book of directors’ duties. This free-to-access online resource, produced by our knowledge team, covers all the key areas of law of which directors can fall foul: from insider dealing and fraud to bribery and tax evasion.
Short and sweet
In producing the guide, our aim was simple: to create a unique information resource that is sufficiently concise to ensure that it’s easy to navigate and read, yet sufficiently in-depth that it provides a comprehensive overview of all the key areas of law for a non-legal audience. To date, the guide has been used by thousands of executive and non-executive board members across public and private companies, and it is updated in line with any changes in UK corporate governance law.
What the Green Book is not is an attempt to make everyone into a legal whizz or to replace high-quality advice by GCs or bespoke external legal advice by organisations like ours. By providing directors with a better understanding and appreciation of potential problems, it does however reduce the number of problems that land on GCs’ desks or ensure that directors already have a better background knowledge before engaging in those conversations.
Spreading the word
No two companies are the same, but our advice is for GCs to actively encourage directors to go through the guide and discuss any questions or queries they may have. Remind them that this is every bit as much part of their company’s risk management as any other part of the business. Indeed, it doesn’t matter whether it’s intentional or unintentional, misleading customers, clients, investors or regulators presents a real and significant financial and reputation risk. Moreover, faithfully and effectively fulfilling the roles and responsibilities of being a director goes to the heart of responsible governance and of the ‘G’ in ESG. This is particularly important from a risk perspective as the focus on such breaches has increased, and this is only likely to continue to rise in the future.
The right culture comes from the top
From our perspective as external legal advisors, while the guide has been very well received, producing it is about far more than having happy clients. We want to help organisations to foment, develop and maintain a strong moral and ethical compass; and having a strong legal compass is central to this. Building the right culture comes from the top. The more informed that directors are, the better able they are to make the right decisions – decisions that have an impact right across their organisations and beyond.
“No two companies are the same, but our advice is for GCs to actively encourage directors to go through the guide and discuss any questions or queries they may have.”
Rachel Neems, Head of Knowledge