Section 172 of the Companies Act 2006 imposes the statutory duty on directors of UK companies to "promote the success of the company for the benefit of the members as a whole". It also sets out a number of matters to which directors must "have regard" when doing so, including the likely consequences of any decision in the long term and the impact of the company's operations on the community and the environment.
Companies which are sufficiently large to need to prepare a full non-financial narrative report with their annual accounts must include a section 172 statement in their Strategic Report, explaining how the directors have complied with this duty. For further information, please view our previous insight article on the section 172 statement.
While the Department for Business & Trade (DBT) is not intending to change the section 172 duty (or any of the other statutory directors' duties), it has launched a consultation exercise, seeking views on how the legislation is working in practice. The DBT is seeking views from company directors and secretaries, as well others with views on this, by 30thMay 2025. If you would like to get involved, please complete this survey.
For any advice on directors' duties, please contact one of our corporate lawyers.
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