Why do directors need protecting?

Unlimited Liability

A shareholders liability is restricted to the value of their investment. A directors liability is unlimited.

The Companies Act

Companies can protect directors for mistakes made but it is forbidden to act if the director faces allegations of a breach of duty or a criminal offence. The director will then face the heavy cost of defending these allegations personally.

Public Opinion

Over the years there has been a shift in society and there is now a desire by the public to see directors held accountable for their actions. This is particularly true where injury and death to employees or the public has occurred.

Proposed Legislation on Corporate Killing

Proposed new legislation on Corporate Killing will affect over 50,000 businesses.

Health and Safety Legislation

CURRENT Health and Safety legislation has already proven adequate in convicting directors of SME companies with CRIMINAL offences.

Director Disqualifications

Director disqualifications are on the increase as regulators seek to hold directors responsible for their failings.

Supporting Entrepreneurialism

Running a business is not always easy. It stands to reason that mistakes are going to be made. Consequently directors need protecting, not from deliberate acts of mismanagement but from the risk of misjudgement, lack of knowledge or understanding and unforeseen circumstances.

At the same time as seeking greater accountability, society also wants more risk takers and to create an entrepreneurial culture. This will be hard to do if the downside for mistakes is not balanced with tools to allow directors to protect themselves.

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