The difference between company directors, and newspaper editors and proprietors

Posted: Wednesday, 21 December 2011 @ 17:59
I must confess to a fascination with the Leveson Inquiry into the Culture, Practice and Ethics of the press.

Piers Morgan was in the witness box yesterday answering questions about his time as editor of the Daily Mirror. His evidence echoed that of James Murdoch given to the House of Commons Culture, Media and Sport Committee: he didn’t know what was going on in his organisation.

It’s something I hear a lot from company directors facing claims against them personally arising from the way their companies were run. “That was the Financial Director’s responsibility. I was out on the road most of the time selling” is a typical response when it comes out that financial shortcuts had been taken.

Unfortunately for directors, they are legally responsible for financial decisions taken even if they were not involved in the decision-making themselves. The courts take the hard-line view that directors should make sure they know about how the company is run, as that is what being a director is all about. If they are being kept in the dark by other directors, they should resign.

Many people see the title of director as a status symbol. Others view it as well-earned recognition for all the hard work they have put into their companies. However, a directorship is a legal role, it is someone who directs how a company is to be run. When they become directors, they take on many duties and responsibilities, as well as all the privileges.

If you think your company may be doing something wrong, take legal advice as to what you should be doing to protect your personal position. If you turn a blind eye, like newspaper editors and owners, it could be you in the witness box but, unlike them, it’s much more likely that you’ll lose your life savings for not taking action sooner.

Gary Cousins
Business Solicitor 

Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
Call Gary on +44 (0)121 778 3212 or by email
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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Thank you. Your response is great, very straight to the point! Hopefully this will bring an end to the matter. I will certainly be recommending your services as I am very impressed with the prompt dealing of this matter.
Janet Burbidge

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