Boardroom Summaries are designed to give directors and executives a quick appreciation of new or changing issues and regulations that affect themselves or their companies. The main text provides a broad overview of the subject, with additional information on selected areas being provided in the coloured band.

Companies Act 2006:DIRECTORS' DUTIES AND DERIVATIVE ACTIONS

The new Companies Act introduces a whole range of changes tothe legislation governing companies and their directors. This note looks at two particularly important areas: directors’ duties and the rights of shareholders to sue directors (“derivative actions”). 

Extradition

The UK and US, driven by anti-terrorism objectives, signed a treaty to speed up extradition applications in March 2003. The resulting fast track regime, dispensed with requirements to produce clear evidence in support of an extradition.

Directors' IndemnificationReform

Since April 2005 companies have been allowed to give directors financial help during litigation and can also indemnify their directors against certain liabilities to third parties even if the directors are at fault.

IFRS

From January 2005 all UK and EU listed companies have to use International Financial Reporting Standards (IFRS). This will have a profound effect on companies’ basis of accounting and important implications for directors.

Public Offering Of Securities

Would be investors and analysts have always scrutinised the prospectuses of companies raising capital for MBOs, stock exchange listings, mergers, expansion and so forth. And that scrutiny does not stop once the transaction has been completed. Stakeholders and potential investors want to know how well their money has been invested - and in an unforgiving recessionary environment, there are no buoyant equity markets to conceal underperformance.

Contaminated Land Regulations

Preventing new contamination by industry is a priority of the government’s policy on land contamination (reflected in Part I of the Environmental Protection Act). But as well as having to stop new contamination, we also have to contend with a huge and unquantified backlog of historical contamination. The main aim of the new contaminated land regulations (part IIA of the Environmental Protection Act) is to provide a better system for finding and cleaning up this contaminated land. 

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