Insights

In this update on the Companies Act 2014 (the “Act”) we discuss the topical issue of loans/advances between a company and its directors.

Directors of NFPs and charities, by virtue of their function, carry a heavy burden of duties, obligations and responsibilities in the management of their organisations. The ever increasing influence of law and regulation in that process, some directly impacting on the manner in which they carry out their duties, makes it essential that they equip themselves with a clear knowledge of how it affects both them and the organisation they serve.

The Companies Act 2014 (the “Act”) which consolidates all old legislation into 25 parts and over 1400 sections, was enacted on 23 December 2014 and commenced 1 June 2015. The CLG is a company most commonly used for charities, social clubs and property management.

Following on from our overview of the Companies Act 2014 (the “Act”), in this publication we set out the new requirements for large companies to form an audit committee.

Under common law directors occupy a fiduciary role in relation to companies. Directors are required to act in good faith in the interests of the company and this duty is owed to the company as a whole rather than to the individual members of the company. The equitable and common law principles relating to directors’ duties are specified and codified in Part 5 of the Companies Act 2014 (hereafter the “Act”) and became effective as of the commencement of the Act on 1 June 2015.