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10 J. Corp. L. Stud. 1 (2010)

handle is hein.journals/corplstd10 and id is 1 raw text is: Journal of Corporate Law Studies REGULATING THE CONDUCT OF DIRECTORS THE RT HON LADYJUSTICE ARDEN DBE Before the enactment ofthe Companies Act 2006 there was no statutoy statement ofdirectors' duties in UK law. Whether or not such a statutoy statement should existhad been the subject of academic debatefor over a centuy. The argumentsfor and against the codification of directors' duties were considered by the Law Commissions and subsequently by the Company Law Review prior to 2006. Their considerations informed the drafting of the Companies Bill, which when it was enacted replaced the existing common law duties with seven statutory duties. The movefrom common law to cod fied duties was seen as necessay to ensure better corporate governance, and therefore better corporate responsibility, in the changed corporate landscape of the modem era. Although the codified duties have only recently come intoforce, they are already facing significant tests, which are being presented by the current financial crisis. The Companies Act 2006has strck a new balance between companies and society, and it is hoped that by that new balance companies and society may reconnect. A. INTRODUCTION The current economic crisis has been a wake-up call. There have been several high-profile instances of fraud and mismanagement. Mismanagement is often said to be the result of short-term horizons defined by bonuses paid to directors. Accordingly, corporate governance is now under intense scrutiny. A report by the UK Treasury Select Committee recently identified important . . . corporate governance failures in the banking sector.' This conclusion echoed concerns raised by regulators, politicians and lawyers across the globe. Against this backdrop, the subject of directors' duties is both topical and important and that is the subject of this article. The starting point for any discussion of directors' duties in English law is the Companies Act 2006. Comprising about 1,300 sections and 16 schedules, the Act is the largest ever UK Act of Parliament. Its size, however, is not the only thing that makes this Act remarkable. Although much of the Act is not new, but * Member of the Court of Appeal of England and Wales This article was presented at the Company Law Symposium in Honour of the Late Professor Mike Larkin (10 March 1949-16 November 2007), the Oliver Schreiner School of Law and the Mandela Institute, University of the Witwatersrand, Johannesburg. I House of Commons Treasury Committee, Banking Crisis: Reforming Corporate Governance and Pay in the City (London, The Stationery Office Limited, 2009). April 2ol1o 1

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