Corporate governance is a description of the management structure for companies and corporations, and refers to how companies are managed, directed and controlled. It is vital that every company, whatever size it is or business it is in, properly complies with the rules of corporate governance.
Conventionally, companies are managed on a day-to-day basis by an executive board of directors, one of whom may be the primary or managing director.
Meetings convened for directors may include non-executive directors who attend either for a supervisory or specialist purpose, and such meetings will be chaired by an independently appointed chairman.
In the case of bigger or listed companies
- a chief executive officer may be appointed to lead the day-to-day management of a company as his/her primary executive role;
- Unlike a managing director, a CEO will act as the main point of contact between the board of directors and the company and will manage corporate decision-making on a day-to-day basis, whereas the managing director is appointed to draw together both the executive and other (or non-executive) parts of the business, to ensure the company is properly managed.
Non-executive directors are directors who do not participate in the company’s day-to-day business and are usually appointed for their specialist skill or for the purpose of supervising the management of the company by the other executive directors.
All directors of a company, whether they act as a CEO, are the managing director, are the chairman or are a non-executive director, have fiduciary duties and other duties owed to the company, third parties or the public generally.
All directors of a company hold a position of trust and most of their duties and obligations have been codified within the Companies Act 2006, which sets out a strict legal framework as to how a company should be managed. However, the owner/managers of a company can influence this strict legal framework by entering into a shareholders agreement to change some of these legal requirements.
At Francis Wilks & Jones we have comprehensive involvement with the risks directors face and some of the most common areas where such risks arise. Please see below a non-exhaustive list of the main areas of dispute where directors can face a personal liability for their decision-making:
- who runs a company?
- management of finances;
- the board of directors and decision-making;
- requirements to maintain accounting records;
- importance of the taxman;
- Companies House;
- public interest risks – marketing and sales;
Please call any member of our team for your consultation now and we would be delighted to help. Alternatively email us with your enquiry and we will call you back at a time convenient for you.