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19 November 2018
The GC100, being the association of general counsel and company secretaries working in UK FTSE 100 companies, has issued guidance on the practical interpretation of section 172 of the Companies Act 2006. This section imposes a general duty on directors to act, in good faith, in a way they consider would be most likely to promote the success of their company for the benefit of its members as a whole. Factors which will affect the success of the company include the interests of the company's employees, the needs of its customers, and relationships with suppliers and other stakeholders. Directors also need to consider how the actions of the company affect the community and the environment, and the company's reputation. These factors constitute a non-exhaustive list of matters that require consideration.
The guidance aims to provide directors with practical help in interpreting their section 172 duties rather than offer legal advice. It sets out five specific things to help directors embed section 172 in their decision making:
Within all of this, there is one key principle, namely the culture of the company. The guidance recommends that directors consider how to embed in the habits and behaviour of the board, management and employees, a culture which is consistent with the company's goals in relation to stakeholders, whether employees, customers, suppliers, local communities, the environment or others affected by or engaging with the company's activities.
For further information on this topic please contact Edward J Dawes at Squire Patton Boggs by telephone (+44 121 222 3000) or email (firstname.lastname@example.org). The Squire Patton Boggs website can be accessed at www.squirepattonboggs.com.
This article has been reproduced in its original format from Lexology – www.Lexology.com.
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