Directors and Dubious Business Practice

Dubious business practice will always be with us, but it is more likely to be uncovered when business is tough. Directors who discover such practices within their companies can find themselves in a difficult situation. This is especially common when a director finds that the true financial position of a company has been disguised.

What should you do if you find yourself in such a position?

Firstly, try to establish the facts of the situation and its impact and severity. Once that is known, consider the ethical principles which apply to company directors under the Companies Act 2006 and other legislation, and your responsibilities as a director as well as under your contract of employment. Consider also your company’s corporate policies and procedures.

If necessary, clarify your obligations by speaking with colleagues and/or your company’s HR department. It is important when consulting with others not to breach confidentiality.

When deciding what to do next, taking legal advice is sensible. Taking the wrong action may have unpleasant consequences – however, doing nothing might be even worse. Remember that it is against the law (under the Public Interest Disclosure Act 1998) for an employer to discriminate against an employee who makes a ‘protected disclosure’.