Richard Beavan of corporate law firm Nabarro provides a round-up of forthcoming laws affecting directors
Working Time Directive—more holiday entitlement
From October 1, 2007, the Working Time Regulations will increase the statutory minimum holiday entitlement to 24 days per year for a full-time worker. This is going up to 28 days in April 2009. The 24 days can include bank holidays which means that the standard "20 days plus bank holidays" contract will still be compliant with the Working Time Regulations.
Action: Check employee holiday entitlements.
Directors & Officers' Liability Policies
On October 1, 2007 Part 11 of the Companies Act 2006 comes into force (see panel, right). It sets out the circumstances in which shareholders can bring "derivative claims" against directors on behalf of the firm. The new provisions set out a wider range of circumstances in which shareholders are able to bring these derivative claims.
Action: Review current D&O liability policies to ensure they will cover new derivative claims.
Corporate Manslaughter a new offence
On April 6, 2008, the Corporate Manslaughter and Corporate Homicide Act 2007 introduces a new offence of corporate manslaughter, replacing the common-law offence of manslaughter by gross negligence. The new offence applies to corporate bodies in the public and private sectors, but does not create any new liabilities for directors, who can already be prosecuted under health and safety laws. The Office of Public Sector Information has published explanatory notes on the new offence on its website.
Action: Review the OPSI's explanatory notes at www.opsi.gov.uk
Electronic communications with shareholders
Companies can now send and receive communications to and from shareholders electronically, saving time and money. Shareholder approval is required to make full use of the new provisions, which were introduced by the Companies Act 2006. If your company's AGM is approaching, consider adding a resolution to the notice of meeting approving the adoption of the new electronic communications provisions.
Action: Consider moving to electronic shareholder communications at the next AGM.
Pensions—triggering employer debts
Current pensions law can give those companies that operate a multi-employer defined benefit pension schemes a nasty shock if they carried out internal group reorganisations involving employee transfers. These reorganisations can trigger an immediate liability to make good the part of the overall funding deficit that relates to the transferring employees. Amending regulations effective in December give greater flexibility in dealing with pension scheme debts that may be triggered on corporate transactions or reorganisations.
Action: Any companies undertaking transactions or reorganisations either before or from December 2007 which involve a defined benefit occupational pension scheme or which are considering closing their pension scheme to future accrual should take specialist advice.
