There are a number of transgressions that could lead to a director being liable for prosecution; some of them are for personal misdemeanours such as embezzling company funds; insider trading; filing false or misleading accounts; fiddling expenses; and failure to file accounts.
There is a lot of kudos around being a company director, but because of the changes in a lot of statutes, the onus of responsibility on a director is making many people consider whether the benefits are actually worth it, particularly if the role is that of non-executive director.
The law insists that directors have to act with due care and diligence in the interest of the company, and that s/he acts in good faith and not act in breach of his/her fiduciary responsibilities. On the one hand, this spells out quite clearly what the responsibilities of a director are, but on the hand, it could be described as being vague if a company wants to accuse a director of breaching any part of it.
This has resulted in many directors being liable for committing transgressions that could potentially lead to prosecution, though in reality there have been few successful prosecutions or convictions.
An example of a director being prosecuted and convicted is Jeff Levenstein, who was the CEO of Regal Treasury Bank, who was convicted eight years after the collapse of the bank. Other directors of this bank are also being sued based on the allegation that they allowed the Bank to trade recklessly and/or they failed to stop Levenstein acting as he did. Naturally, other directors are watching the proceedings with interest because who knows, next time a company wants a fall guy, it could be their necks that are on the line.
There is a lot of kudos around being a company director, but because of the changes in a lot of statutes, the onus of responsibility on a director is making many people consider whether the benefits are actually worth it, particularly if the role is that of non-executive director.
The law insists that directors have to act with due care and diligence in the interest of the company, and that s/he acts in good faith and not act in breach of his/her fiduciary responsibilities. On the one hand, this spells out quite clearly what the responsibilities of a director are, but on the hand, it could be described as being vague if a company wants to accuse a director of breaching any part of it.
This has resulted in many directors being liable for committing transgressions that could potentially lead to prosecution, though in reality there have been few successful prosecutions or convictions.
An example of a director being prosecuted and convicted is Jeff Levenstein, who was the CEO of Regal Treasury Bank, who was convicted eight years after the collapse of the bank. Other directors of this bank are also being sued based on the allegation that they allowed the Bank to trade recklessly and/or they failed to stop Levenstein acting as he did. Naturally, other directors are watching the proceedings with interest because who knows, next time a company wants a fall guy, it could be their necks that are on the line.
