Directors Liability

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	Untitled Document Companies Act 2006 Liability for directors for false or misleading statements in reports Directors who make false or misleading statements or who fail to include something that is required to be included in certain reports which make up the company's annual accounts now face personal liability. The relevant reports are the directors' report, the directors' remuneration report or any summary financial statement, to the extent that the information in the statement is derived from either of those reports. They apply to reports first sent to members under section 238 or 251 of the Companies Act 1985 after 20 January 2007. The director is only liable if he knew, or was reckless, as to whether any statement in the report was untrue or misleading or if he knew that an omission from the report was a dishonest concealment of a material fact. If the company suffers loss as a result of any such mis-statement or omission, the director is personally liable to compensate the company for that loss. These new provisions, which take effect on 20 January 2007 as a result of the coming into force of Section 463 of the Companies Act 2006, expressly exclude any liability to a third party who relies on information in these reports. This means that people such as auditors, who may be involved in producing these reports, will not face liability to third parties under this new provision; however they will remain potentially liable to the company if negligent. Nothing in the new provisions affects any liability for a civil penalty or criminal offence.

			What's New!
	24 June 2008 The Government has published a draft of the Eighth Commencement Order, which relates to provisions of the Companies Act 2006 due to come into effect from 1 October 2009. Comments are invited on the draft order by Friday 5 September 2008. Read more 7 May 2008 New Statutory Instruments published for consultation. BERR has published a set of draft Statutory Instruments, all of which will come into force on 1 October 2008, for consultation. Read more 28 March 2008 From 6 April 2008 private companies no longer need to appoint a company secretary Read more

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