We often hear about the fat cats and large remuneration deals but a recent report questioned whether it’s all fun being a director.
A recent report from the Economist Intelligence Unit and law firm Clifford Chance finds that nearly two-thirds of all UK board members refuse to become non-executive directors due to concerns that they will be targeted by activists and on social media should anything go wrong. The Daily Telegraph report stated that “industry executives are shunning lucrative non-executive directorships fearful of a new British culture of “corporate criminalisation†as business leaders are increasingly expected to take personal liability for any malpracticeâ€
But it’s not just non-executive or for that matter executive directors of large organisations that face exposure in this “new British cultureâ€. All directors, officers and employees of companies can face unlimited personal liability, no matter the company’s size.
“UK corporations have a minefield of issues to navigate as they try to protect their business against incidents that could severely damage their reputation,” said Guy Norman, a partner at Clifford Chance.
In the Companies Act 2006 there are over 200 offences for which directors can be personally liable and new reforms under consideration may expose directors to direct compensation claims. There is a long list of areas where individual directors and officers are increasingly being held to account, such as:
- Bribery Act
- Environmental legislation
- Health & Safety regulations
- Financial reporting requirements
Not surprisingly the report also showed that 82pc of UK board members are investing time and money in improving risk management, but fear this “overemphasis” may be inhibiting growth.
Guest blogger: Mark Snelham, Head of Management Liability, Hiscox
Recent Comments