Many company directors are still not aware of their responsibilities as part of the Companies Act 2006, and remain ignorant that they could be prosecuted for their failures to take appropriate action when required.
That’s the view of Stuart Williams, a director at Cowens Survival Capability, a business that helps firms understand how to ensure that they have the right business continuity procedures in place. Stuart says that recently, Cowens SC has been inundated with enquiries from directors who fear that the economic environment could signal the end of their business, and are concerned about the consequences.
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Stuart commented:“Under the Companies Act 2006, directors must make decisions and take appropriate actions that make their business a success. The difference now though is that directors can be individually held liable, not just the corporate entity. Many people are unaware that they do not even have to be named as a director to incur liability, as being in position to control or influence a business can leave an individual open to liability.”
Failure to take correct actions could lead to a director being sued by the company, shareholders and customers, with consequences including fines or jail terms. Business continuity planning is about ensuring the right strategies are in place ensuring the right strategies are in place so that when a crisis happens, a business can respond quickly and effectively. Part of building a robust plan involves correctly analysing internal and external risks, such as site safety, fraud, environmental procedures, and health and safety issues. The role of a director, as defined by the Government, is someone who must decide on what is most likely to promote the company’s success – in effect, a long-term increase in value. Says Stuart: “It’s a complex role being a director, and whilst it is a good title to have, people must realise that the duties are now enshrined in law. The company, its shareholders, employees, creditors, competitors, regulators and even the Government could sue you if they feel a loss has arisen because of a director acting incorrectly.
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This means that if a claim is brought against a person, they may be personally liable to defend those claims, something that could put personal assets at risk. The effects of this could be that a person is disqualified as a director, a criminal prosecution leaving to a jail term, personal bankruptcy, the loss of a job or reputation and then of course there is the impact on a family unit should any of this happen.” Cowens advises its clients across the UK on these issues, first ensuring that a risk analysis is carried out before an appropriately strong risk management system is implemented.
Having developed over the past 25 years, the knowledge, expertise, experience, understanding and resources to help and guide people to carry out risk analysis properly. Cowens will suggest practical measures to eliminate, reduce or minimise exposure.
Advisors at Cowens will provide the tools and technical support to assess the probability of the risk occurring and give people all the information they need to make a qualified commercial decision whether or not to accept it.
