New legislation will 'raise the bar' for directors

New legislation that comes into effect in October means that company directors will face a raft of new responsibilities, the Association of Chartered Certified Accountants (ACCA) has said.

A report examining the implications of the impending Companies Act 2006 on directors has been published by ACCA.

John Davies, head of business law at ACCA, explains that the new act "raises the bar" in terms of the skill and diligence that shareholders can require of their company directors.

He said: "The act makes directors more accountable than ever. Individual shareholders are given new powers to bring legal actions against their directors for breach of their duties and directors may be liable to their companies if they include deliberately misleading information in their company reports."

The legislation also breaks new ground by demanding that corporate social responsibility is integral to directors' assessments of what is best for their company.

Mr Davies added: "The requirement for them to weigh up and reconcile potentially conflicting considerations is going to represent a new challenge for all directors in the years ahead."