Breach And Its Consequences : The Protection From Personal Accountability

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Breach and its Consequences Any director who breaches his/her of duty is liable to reimburse the business for any damage or loss, which the company has faced as a result of the breach. In the majority of circumstances, the actions of the directors will be considered the actions of the business itself, hence being in consistence of the principles of company law. Therefore, any failure committed under this principle, will be considered a failure of the company itself and not of the director. However, the protection from personal accountability is not an absolute, thus, any person performing as a director should be cognizant that there might be both civil and criminal consequences whenever they fail to perform in light of their obligations as directors. In regards to civil liability, directors are responsible for all what they do to the individuals who chose them to act as directors. Hence if they, as directors have exploited the business property in a way to have triggered losses to the corporation, it might require them to reimburse the company or to compensate the business for its losses. Moreover, directors may also be held accountable to creditors whenever they fail to give proper attention to the genuine interests of those creditors. Additionally, the courts can also disqualify the directors for up to 15 years, who have clearly failed to meet the high standards expected by the law in regards to their duties. The Companies Act 2006 and other statutes also categorize a great number of situations where a failure to conform to statutory requests could result in criminal sanctions being forced on establishments and their individual directors. Therefore, the results arising from braches can be very serious to directors, resulting... ... middle of paper ... ...concerns that both, corporations and their directors need to address, such as decisions and their impact within society. The codification came as a vehicle to reflect best practices, in order to steer directors towards higher values. The codification happened also to make details of the law more available to directors, and was particularly welcomed by smaller businesses according to the Law Commissions . Although the codification can indeed play a vital role in enhancing corporate governance, it remains unclear whether this statutory statement is, in reality, leading to more directors’ decisions to be confronted within the judicial system. What became clear though, is that it behooves directors to know what steps to follow regarding their statutory obligations, as well as that businesses have strong guidelines regarding the decision-making process of the directors.
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