The law is very clear that Directors are liable for negligence. They are expected to show due care and diligence in the discharge of their duties.
The buck stops with the board and senior management. Recent court rulings across the world have not spared them. Some of these liabilities are in contract, some are in tort, some are under the criminal law and others are statutory.
The latest amendments to the UK companies Act which came into effect in October 2007 have made sweeping changes to keep the Board on tenterhooks. (Sections 171 to 177). Now their duties are well codified and hardwired into the statute.
The clarity in the UK Law, defining their roles and responsibilities is bound to quickly permeate into the laws across the world in several countries and in the short-term, it will certainly provide a valuable reference point for courts.
To add to the woes, in June 2008, the ISO announced a new IT standard - ISO38500 that now makes Directors responsible for IT Governance. Considering the recent court rulings and the present corporate governance atmosphere, its not an overstatment to say that Directors today are on tenterhooks.
Go to top.