27 February 2013
“A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest which conflicts, or possibly may conflict, with the interests of the company.”
J Sainsbury plc Annual Report 2012, page 40:
“The Board…considered a potential conflict for Justin King, whose son, Jordan King, is one of the country’s top young racing drivers. His recent success is attracting interest from potential sponsors. Current sponsors include high net-worth individuals and companies with established interests in motor sport. Some of the sponsors are also suppliers to Sainsbury’s. Jordan King arranges his sponsorships through his company, 42 Racing Ltd. The Board has satisfied itself that Justin King has no direct involvement in the trading relationship between Sainsbury’s and any supplier who may have an interest in 42 Racing Ltd. It is satisfied that the governance of all supplier relationships is robust and that there is therefore no conflict of interest regarding these arrangements.”
H/T The Times 27 February 2013: Sainsbury boss Justin King’s son is given a racing start by store’s suppliers
8 February 2013
From Wey Education plc’s announcement on 29 January 2013:
“On 17 January 2013, the Company sent Dr Atkins a copy of a report which set out, inter alia, allegations (i) that Dr Atkins had breached her fiduciary duties and her conduct was not commensurate with her duties and responsibilities as Chief Executive Officer of the Company; (ii) Dr Atkins had accepted a position as a Director of a Wey client company, without disclosing such to the Wey Board, or seeking permission for such; (iii) that Dr Atkins had incorporated various companies, having names similar to that of the Company and its principal subsidiary, Zail Enterprises Limited, where Dr Atkins was named as the sole shareholder and Director, again without disclosing such to the Wey Board; and (iv) that Dr Atkins had supplied incomplete or inaccurate information to the Company’s ISDX Advisor as to her Directorships and shareholdings.”
See also: Directors: Loyalty, avoiding conflicts and not making secret profits
1 February 2013
On 30 January 2013 the Financial Reporting Council issued a consultation document on implementing the recommendations of the Sharman Inquiry on Going Concern and Liquidity Risks. The consultation document is here and the accompanying press release is here. From the press release:
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28 January 2013
The GC100 has responded to the final report of the Kay Review of UK Equity Markets and Long-Term Decision Making.
For the GC100′s response to various suggestions made in the Kay Review, see the following paragraphs of the GC100 document:
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21 January 2013
In 18 January 2013 ICSA published a guidance note on ”Liability of non-executive directors: care, skill and diligence“. From the accompanying press release:
“The latest ICSA guidance note suggests ways in which NEDs can approach their work which would also allow them to demonstrate to a regulator, or in a court of law, that they had executed all necessary steps to reduce their liability exposure.
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21 September 2012
Ofcom, in its decision issued yesterday on whether Sky is a fit and proper person to hold a broadcasting licence, gives a good example of how section 174 Companies Act can be breached by an omission or lack of action by a director. That section requires that a company director “must exercise reasonable care, skill and diligence”.
In assessing James Murdoch’s failure to take meaningful steps to investigate allegations of wrong-doing at the News of the World (i.e. phone hacking), Ofcom observes that:
“…a company director is required to exercise reasonable care, skill and diligence in the exercise of his functions. He may delegate, but has a duty to supervise appropriately. We consider James Murdoch’s conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged. In respect of the matters set out above, in our view, James Murdoch’s conduct in relation to events at NGN repeatedly fell short of the exercise of responsibility to be expected of him as CEO and chairman.”
Ofcom clearly believes that Mr Murdoch’s behaviour and absence of challenge fell short of fulfilment of that duty.