Not only the shareholders and directors of the companies being freshly incorporated but those of the companies that are already in existence need to study the general duties of the directors in the Act.
Executive Summary: The companies Act in 2006 are a pioneering law contemporary times that places great moral and social responsibility on the directors of the companies. Definitely, UK has taken the lead in calling for a more mature and responsible behavior on part of the Directors of a company. The Companies Act 2006 replaces the companies of 1985 and 1989. The Act, it is hoped, will usher in an era of the more responsible role for people in business leading to “enlightened shareholder approach”. The shareholders will hold the directors more accountable for their acts leading to the generation of awareness for the social and physical environment. The government feels that business atmosphere, society, and the environment are inextricably linked to each other and the positive or negative fallout of one affects the others.
The registration of companies started in 1848. Earlier in the Companies Act of 1948 originated the “True and Fair View” (Bucheery, n.d.). This entailed upon the directors to give a true and fair view of the fiscal position of the company and the profit and loss were reflected in the annual balance sheet for the knowledge of shareholders. Later this system was incorporated in the fourth directive of Company Accounts of the European Economic Commission (Flint, 1982). Earlier the refrain in the corporate world was to maximize profits at any cost. But with the world coming together due to globalization and the experience of negative fallouts of the trade and commerce like emission of greenhouse gases, deforestation, and a yawning gap between the developing and the developed world, a need was felt for enactment of a law that required greater business transparency, a commitment to the social and physical environment and reinforcement of confidence of the people in business systems.