UK: Code of Conduct for company directors published

Why should I read this?

The Institute of Directors (IoD) has published a voluntary Code of Conduct for UK company directors. The Code is intended to be a practical tool to help directors make better decisions. It aims to provide a behavioural framework to help directors build and maintain the trust of the public in their business activities. The Code has been written for individual directors of all sizes of companies in the private, public and not for profit sectors. Boards are encouraged to publicly commit to the Code.

The Code has been launched following a period of consultation over the Summer. It is structured around six high-level Principles of director conduct, and each principle is underpinned by a number of undertakings which are intended to achieve positive outcomes.

The six Principles are:

• leading by example – demonstrating “exemplary” standards of behaviour in personal conduct and decision-making
• integrity – acting with honesty and adhering to strong ethical values
• transparency – being open and honest in communications and decision-making
• accountability – taking responsibility for actions and their consequences
• fairness – treating people equitably, without discrimination or bias
• responsible business – integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts

What should directors and boards do?

Directors of UK companies should familiarise themselves with the Code (see under “Further reading” below to access a copy). It is aimed at anyone fulfilling a director or director-equivalent role (whether executive or non-executive and of all types of companies, both public and private). The Code is voluntary and there is no formal means of enforcement. Directors should apply their judgement when applying the Code and seek professional advice in respect of fulfilling their legal obligations. Whilst the Code is written for individual directors, boards are encouraged to publicly commit to the Code. The IoD suggests that this may be done through disclosure in annual reports and on websites, communication to employees and other stakeholders, and through social media. Over time, the IoD intends to develop guidance on the Code describing how it can be applied in a variety of real-life scenarios. If you would like to discuss the application of the Code to directors in your organization, then please get in touch with your usual Eversheds Sutherland corporate contacts.

Further reading on the Code of Conduct

• Institute of Directors Code of Conduct for Directors
• Press release