Finance directors are being warned that they should seek independent legal advice on the risks of holding office in the wake of the new Companies Act.
Midlands law firm Averta Employment Lawyers points out that under the new legislation, company directors will be exposed to greater potential liability than before.
Partner Alan Jones said: 'As a breach of duties can bring substantial claims against individuals, all directors would be well advised to seek independent legal advice on the risks they take in holding office in a company.'
He added: 'One only has to remember the action that the directors of Equitable Life faced in recent years to realise how seriously directors should take complying with their duties.'
Among the directors' duties listed in the Act are the duties to 'promote the success of the company', to exercise 'reasonable care, skill and diligence', to 'avoid conflicts of interest' and not to 'accept benefits from third parties'.
But there is little guidance in the Act as to how much emphasis a director should place on a particular duty, or how success will be measured.
Last month saw the implementation of the latest phase of the Companies Act 2006, which set out directors' duties in writing for the first time.
Previously the duties and obligations on directors had been implied or established by custom and practice over many years.
• See also audit, p76.