The challenge in ensuring compliance when it comes to directors’ duties and officer liability is giving full consideration to all aspects of the legal framework, including the various requirements of the statutory bodies and that of key stakeholders.
First and foremost, understanding how the courts interpret the Companies Act 2014 in terms of directors’ duties and officer liability is fundamental in addressing liabilities and risks. Case law can provide a more nuanced insight into difficulties that could potentially arise, and steps that General Counsel might take to avoid such situations.
Soft law also plays a big role in Corporate Governance, and arguably is the most useful resource for General Counsel. Corporate Governance codes provide a framework for best practice Corporate Governance for directors, officers and administrators across a number of sectors whilst codes are generally voluntary, the principles within the relevant code for the industry the company operates in can assist General Counsel in addressing questions of director and officer liability.
It is essential for General Counsel to regularly audit of regulatory agencies’ guidelines and to identify key areas of risk with possible solutions.
Looking at trends in this area, technological trends are altering the relationship between industry innovators, policy-makers, legislators and consumers is taking precedence over speculative law making. The rise of social media has given the consumers a powerful platform to voice concern about company behaviour, and this has had a significant impact on the duty of directors both to the success of the company, but also in their obligations to stakeholders, shareholders and the environment.
Reacting to technological developments, including the rise of automation, digitalisation and new software that promises to transform not only the exchange of data but also the nature of consumer interactions with insurance companies, has also been a crucial function of regulatory agencies and the courts. Striking the balance between consumer protection and economic prosperity has been a priority and this has been reflected in court decision making.