The Companies Act 2006

Directors are holding their breath as a new law that increases their duties whilst at the same time making it easier for shareholders to take action has yet to show its hand in the courts. Philip Lumb, a solicitor in the insurance team at Mills & Reeve LLP, explains what the changes will mean for companies, their directors and their insurers.

On 1 October 2007, the much-anticipated Parts 10 and 11 of the Companies Act 2006 (“the Act”) come into force. Famously described as a “double wham-my” by Lord Hodgson, Part 10 codifies (and extends) the duties directors (and shadow directors) owe to a company, whilst Part 11 outlines the circumstances in which a member may bring a derivative action against an existing or former director.