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Your Boss loves you too, from 1st October
Directors of companies now have a duty to run a company in the interests of a wide group of stakeholders and not just the company's owners, according to new law which will come into force on 1st October 2007. The law will force directors to consider the interests of 'stakeholders' in a firm, such as employees, the environment and the local community.
Section 172 Companies Act 2006 requires directors to have regard to at least 6 factors when making decisions. Thus:
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to -
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with suppliers, customers and others,
(d) the impact of the company's operations on the community and the environment,
(e) the desirabilityof the company maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the company.
No one fact is given priority over another, and the final decision of a board of directors may, in the event, choose to ignore all the factors - but it must be able to show that it has thought about them all!
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