Companies Act 2006

Oral Answers to Questions — Business, Innovation and Skills – in the House of Commons at 10:30 am on 15th March 2012.

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Photo of Alun Michael Alun Michael Labour, Cardiff South and Penarth 10:30 am, 15th March 2012

What steps he is taking to promote observance of section 172 of the Companies Act 2006.

Photo of Norman Lamb Norman Lamb The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Directors’ duties were codified in the Companies Act 2006, providing legal clarity for directors and raising awareness of their duty to have regard to long-term factors in promoting the success of the company. A variety of guidance is available to directors to help them observe their legal duties.

Photo of Alun Michael Alun Michael Labour, Cardiff South and Penarth

I thank the Minister for that reply. He spells out the need for directors to make judgments that look after the long-term interests of the company in accordance with section 172. Will he take this opportunity to confirm that specific regulatory requirements, which are very often referred to as tick-box requirements, in no way trump, or have to be regarded as superior to, the responsibility of directors to make the sort of judgments referred to section 172, to which he referred in his reply?

Photo of Norman Lamb Norman Lamb The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I can confirm that the duty in section 172 is absolutely clear. The evidence of surveys shows that the duty is well understood, and it is important that directors abide by it.