ICSA, the Chartered Governance Institute, has updated its guidance note on directors’ duties under the Companies Act 2006. It now includes a section on the requirement to report on compliance with the section 172 duty to promote the success of the company. The guidance is particularly aimed at public companies but will also be useful for directors of private companies.
Under the section 172 reporting requirement (contained in section 414CZA of the Companies Act), the strategic report of a large company must include a statement describing how the directors have had regard to the factors set out in section 172(1)(a) to (f) when performing their duty under section 172. The updated guidance sets out matters that could be included in the section 172(1) statement for each of these factors. For example, on relationships with suppliers, customers and others, the guidance says that the statement could include information on: a company’s methods to engage with suppliers and customers and others to obtain their views, and the effect on board decisions; customer relations; prompt payment to suppliers; supply chain sustainability and resilience; and responsible sourcing.
The guidance has also been updated generally in relation to compliance with the duties set out in sections 171 to 177 of the Companies Act and a section has been added on the consequences of a breach of duty.
The guidance is available to members and subscribers on the ICSA website.