The Companies Act 2006 sets out in statute for the first time the general duties that directors owe to their companies. The majority of these provisions and the new statutory right for shareholders to bring an action against directors on behalf of the company (called a derivative claim) come into force in October 2007.
The codification of directors’ duties under the Act, combined with the derivative claim, may lead to an increase in claims against company directors. All companies should therefore review their existing directors’ and officers’ (D&O) policies to ensure that adequate insurance cover is in place.
