organisations, from small charities through to multinational companies have ESG as part of their strategic objectives. Doing so is also enabling businesses to reduce risk and inform direction and enhance overall company performance.”
Sue adds: “The best boards regularly discuss what value they add to their organisations and how they are doing.
“Whether a family business or a National Health Service board, developing skills individually and collectively helps to embrace diversity and enhance performance and decision making. Reviewing the effectiveness of the board is therefore essential, to inform of skills gaps as well as help with succession planning.”
Meanwhile, the Financial Reporting Council’s updates to the UK Corporate Governance Code have added new requirements for listed companies to which the code applies too.
Lila Thomas at FRP, says: “Most will apply from January 1, so boards need to make sure they’ve reviewed the changes if they haven’t already, along with the accompanying guidance – or be ready to explain why they don’t need to comply.”
Helen Clayton, managing partner at Lancashire headquartered accountants and business advisors PM+M, adds that the
Expert View
DOING YOUR DUTY DURING FINANCIAL
DISTRESS By Jane Haymes,
Insolvency team partner, Farley’s Solicitors
When a company is insolvent or on the verge of insolvency, directors’ duties to promote the success of the company for the benefit of shareholders are modified.
There is a shift away from shareholders, towards creditors, and what is in their best interests.
Directors must take every step to minimise potential loss to the company’s creditors, not only to help protect creditors but to mitigate against the risk of personal claims which could follow an insolvency.
These include: • breaches of the duty to creditors
• misapplying or retaining property of the company
• wrongful trading • fraudulent trading
If directors fail to properly discharge the duty to creditors or fall foul of the insolvency legislation which comes into play, they could be personally liable to compensate for loss caused.
They should also refrain from participation in ‘avoidable transactions’, which are capable of being set aside for having prejudiced creditors in the period before formal insolvency.
Directors should be aware of the potential for disqualification proceedings to be pursued, which consider the conduct referred to earlier in this article.
Practical steps directors ought to take include:
• regularly reviewing the company’s financial/trading position
• holding regular board meetings regarding trading
• dealings with the bank and the position of creditors (and recording decisions)
Directors should take advice as early as possible from insolvency professionals to avoid participation in challengeable transactions, and to enable processes to be put in place to ensure that no creditors are put in a worse position by their actions.
LANCASHIREBUSINES SV
IEW.CO.UK Helen Clayton
introduction of updated corporate governance codes, such as the UK Corporate Governance Code 2018, presents both challenges and opportunities for businesses in the county.
She says: “These codes emphasise greater board accountability, transparency, sustainability, diversity, stakeholder engagement and focus on long-term success over short-term gains.
“They also highlight the importance of stakeholder engagement and workforce considerations. For businesses of all sizes, these changes mean greater scrutiny and higher expectations from regulators, investors, and the public.
“However, by aligning with these codes, companies can better manage risks, foster innovation, and ensure sustainable growth, benefiting both the business and wider society.”
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IN VIEW
LEGAL VIEW
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