A new guidance note published today by the Institute of Chartered Secretaries and Administrators (ICSA) is designed to help non-executive directors avoid a range of penalties – from fines, through to disqualification and imprisonment – if they fail to carry out their various duties.
Focusing particularly on the duty to exercise reasonable care, skill and diligence, the guidance note covers such issues as:
- Taking responsibility for their own on-going training and continuous development;
- Being prepared to provide independent oversight and constructive challenge;
- Insisting on receiving high-quality information;
- Making decisions objectively in the interests of the company and
- Avoiding conflicts of interest
Prospective non-executives are also advised to undertake their own due diligence before taking on the role, satisfying themselves that the company is one in which they can have confidence, and can make a strong and value added contribution.
Seamus Gillen, ICSA’s Policy Director said:
‘Becoming a director confers many privileges – of power, influence and status. But the position also carries great responsibilities. No director wants to make the kind of mistake that sees them lose their house, or their reputation, and even less face legal action. This new guidance directly addresses a question we are often asked – what do we need to do to stay out of jail? It will help directors conduct themselves in a way which avoids lasting damage both to themselves and their company’
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