Directors

Director’s duties

In order to help make it easier to understand the general duties that a director owes to their company, there are proposals to introduce a formal, statutory statement of directors’ general duties to the company. This will largely replace the existing duties that have developed over the years through case law. The statement will include a duty to act in a way in which a director considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole.

There will also be more guidance available for new directors on what these duties mean.

Comment
This is essentially good news, as having director’s duties laid down in one place, rather than in a somewhat bewildering array of case law, should make it easier for all directors to both locate and understand them.

Transactions with directors

The current rules that regulate transactions between directors and their company, which require shareholder approval, will also be reformed and restated. In particular, the Bill permits companies, with shareholder consent, to make loans, give guarantees or provide security in connection with a loan to a director.

Comment
This reverses the existing prohibition on such transactions.

There are also proposals to:

enable directors to provide a service address for the public records at Companies House, rather than their private home address. Home addresses can be kept on a separate record, access to which will be restricted
continue to allow companies to have corporate directors, although at least one director will have to be a natural person.

Comment
Proposals here will allow a single person to form both private and public companies.