TRW & Co · Corporate & Commercial
Corporate Governance and Directors' Duties Lawyers in London
Corporate governance lawyers London boards rely on help directors make decisions properly, record them well and stay ahead of fast-moving rules. In 2026 that means the 2024 UK Corporate Governance Code and Provision 29, the failure to prevent fraud offence, Companies House identity verification and a wider test for corporate criminal liability, alongside the long-standing duties in the Companies Act 2006.
Key pointDirectors' duties are owed to the company, so subsidiary directors must weigh their own company's interests and, once insolvency is probable or the company is insolvent or bordering on it, its creditors' interests, rather than simply implementing group instructions.
At a glance
Seven codified duties
Sections 171 to 177 of the Companies Act 2006 set out directors' general duties, including promoting the company's success and avoiding conflicts of interest.
Provision 29 from 2026
The 2024 UK Corporate Governance Code applies from 2025 financial years; the internal controls declaration applies to financial years beginning on or after 1 January 2026.
Failure to prevent fraud
Since 1 September 2025, large organisations can be criminally liable for fraud by associated persons unless they had reasonable fraud prevention procedures.
Identity verification
From 18 November 2025, directors must verify their identity with Companies House; existing directors and PSCs are brought in over a transition period.
Creditor duty
BTI v Sequana confirms directors must consider creditors' interests when the company is insolvent, bordering on insolvency or insolvent liquidation is probable.
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What corporate governance covers in England and Wales
Corporate governance lawyers London boards instruct deal with a simple question that has complicated answers: who decides what in a company, how those decisions are made and recorded, and who is accountable when they go wrong. Governance covers the constitution, the board, directors' duties, shareholder rights, reporting and the systems that keep a company within the law.
It matters to every company, not only listed groups. Owner-managed businesses need clear articles and board procedures to avoid disputes. Investor-backed companies need governance that satisfies investors without slowing management. Large private companies have reporting duties. Listed companies apply the UK Corporate Governance Code. Subsidiaries of overseas groups need local boards that genuinely exercise judgement.
Governance becomes a legal question at predictable moments: a new investor arrives, a director is conflicted, the company approaches financial difficulty, a regulator or prosecutor asks what the board knew, or shareholders fall out. At each point the quality of earlier decisions and records will be tested.
Our corporate team advises boards, individual directors, company secretaries and shareholders on all of these issues, and our article on directors' duties under the Companies Act 2006 gives a practical overview.
The legal and regulatory framework
Directors' general duties
The core framework is Part 10 of the Companies Act 2006. Sections 171 to 177 codify seven general duties: to act within powers, to promote the success of the company, to exercise independent judgement, to exercise reasonable care, skill and diligence, to avoid conflicts of interest, not to accept benefits from third parties, and to declare interests in proposed transactions. The duties are owed to the company, and the company is the proper claimant if they are breached.
The duty in section 172 requires a director to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so they must have regard to listed factors, including the long-term consequences of decisions, employees, suppliers, customers, the community and the environment, and the company's reputation.
The creditor duty
When a company is insolvent or bordering on insolvency, or an insolvent liquidation or administration is probable, directors must also consider the interests of creditors. The Supreme Court confirmed the existence and scope of this duty in BTI 2014 LLC v Sequana SA [2022] UKSC 25. Separately, the wrongful trading provision in section 214 of the Insolvency Act 1986 can make directors personally liable to contribute to the company's assets if they continue trading when they knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation or administration.
Transactions requiring shareholder approval
Chapter 4 of Part 10 requires member approval for certain transactions with directors, including long-term service contracts, substantial property transactions, loans and quasi-loans, and payments for loss of office. These rules apply alongside the general duties and are a frequent source of technical breaches in owner-managed companies.
Governance codes
The UK Corporate Governance Code 2024, published by the Financial Reporting Council, applies on a comply-or-explain basis to companies in the commercial companies and closed-ended investment funds listing categories. It applies to financial years beginning on or after 1 January 2025, except Provision 29 on the board's declaration about the effectiveness of material internal controls, which applies to financial years beginning on or after 1 January 2026. Our article on Provision 29 and the internal controls declaration explains what boards need to evidence.
Very large private companies must include a statement of their corporate governance arrangements in the directors' report under the Companies (Miscellaneous Reporting) Regulations 2018. The requirement captures companies with more than 2,000 employees, or with turnover above £200 million and a balance sheet above £2 billion. Many use the Wates Corporate Governance Principles for Large Private Companies, which cover purpose and leadership, board composition, director responsibilities, opportunity and risk, remuneration, and stakeholder engagement.
Economic crime and transparency reforms
The Economic Crime and Corporate Transparency Act 2023 has reshaped governance risk in three ways. First, since 18 November 2025 directors must verify their identity with Companies House, with existing directors and people with significant control brought in over a transition period.
Second, the failure to prevent fraud offence came into force on 1 September 2025 for large organisations, with a defence of reasonable fraud prevention procedures. Third, the Act reformed the identification doctrine so that a company can be criminally liable for economic crimes committed by a senior manager acting within the actual or apparent scope of their authority, and the Crime and Policing Act 2026 extends that test to criminal offences generally.
Our articles on Companies House identity verification and failure to prevent fraud explain each regime.
Key board decisions and how corporate governance lawyers London boards use approach them
Good governance is mostly about making ordinary decisions well and recording them properly. The table below sets out common decisions and the governance questions corporate governance lawyers London directors consult will ask.
| Decision | Key legal points | Typical pitfall |
|---|---|---|
| Director has an interest in a contract | Declare the interest under section 177; check whether the articles allow the director to vote and count in the quorum | Interest declared informally but not minuted |
| Director has a situational conflict | Section 175 conflict; in private companies independent directors can usually authorise it unless the articles prevent this | Authorisation given by conflicted directors only |
| Paying a dividend | Distributable profits must be shown by relevant accounts; directors must consider solvency and creditor interests | Dividend paid without up-to-date accounts |
| Major acquisition or disposal | Section 172 factors, authority limits, any shareholder approval or listing rule requirements | Board papers do not show stakeholder factors were considered |
| Trading in financial difficulty | Creditor duty, wrongful trading risk, professional advice, frequent board meetings | Continuing to trade on optimism without cash-flow evidence |
| Removing a director | Ordinary resolution under section 168 with special notice; check service contract and shareholders' agreement | Ignoring contractual or unfair prejudice consequences |
Removing a director is a common flashpoint. Our article on how to remove a director sets out the procedure under section 168 and the practical risks.
The governance review process
Many boards commission a governance review after a change of ownership, a regulatory event or rapid growth. A structured review usually follows these steps.
- Scope and objectives. Agree what the review covers, such as the constitution, board processes, delegated authorities, subsidiary governance, reporting duties and compliance frameworks, and who will receive the findings.
- Document review. Examine the articles, shareholders' agreements, board and committee terms of reference, matters reserved to the board, delegated authority matrices and recent minutes.
- Interviews. Speak to directors, the company secretary and key executives to test how decisions are really made, compared with what the documents say.
- Gap analysis. Compare current practice with statutory duties, any applicable code, investor requirements and regulatory expectations, including fraud prevention procedures.
- Recommendations. Prioritise changes by legal risk and effort. Typical outputs include revised articles, a new board charter, a conflicts register and updated authority limits.
- Implementation. Adopt changes by board and shareholder resolutions, file amended articles at Companies House, and train directors on new procedures.
- Ongoing review. Diarise an annual board effectiveness review and re-test fraud and internal control procedures as the business changes.
Minutes are evidence. If a decision is later challenged by a liquidator, regulator or shareholder, the court will look at what the board papers and minutes show the directors considered. A short note recording the main options, the advice received and the section 172 factors weighed is far more valuable than a one-line resolution.
Documents and records to keep in order
Corporate governance lawyers London companies rely on usually start with the records. A company that can produce the following quickly is in a much stronger position when questions arise.
- Current articles of association and any shareholders' or investment agreements, with all amendments.
- Statutory registers, including members, directors and people with significant control, and confirmation that identity verification is complete.
- A schedule of matters reserved to the board and a delegated authority matrix.
- Board and committee minutes, board packs and written resolutions.
- A register of directors' interests and conflict authorisations.
- Directors' service contracts, letters of appointment, deeds of indemnity and directors' and officers' insurance policies.
- Risk registers and evidence of internal controls, including fraud, bribery and sanctions procedures.
- Subsidiary governance documents for each group company, including local board composition.
Our article on model or bespoke articles of association explains when the default model articles are no longer enough.
The test of governance is not whether a board made the right decision, but whether it can show it made the decision properly.
Risks and common mistakes
Rubber-stamp subsidiary boards
Group subsidiaries often hold board meetings that simply approve decisions taken elsewhere. Each subsidiary director owes duties to that subsidiary, not to the group, and must exercise independent judgement. If a subsidiary later becomes insolvent, a liquidator will examine whether its directors considered its own interests and creditors, particularly on intra-group transfers, guarantees and dividends. Make sure subsidiary boards receive proper papers, consider the subsidiary's position separately, and record the reasons for their decisions. This is especially important where directors are based overseas and rely on head office.
Missing the shift to the creditor duty
Directors focused on rescuing a business can miss the point at which creditors' interests must be considered. The Sequana judgment confirms that the duty is engaged when the company is insolvent or bordering on insolvency, or when an insolvent liquidation or administration is probable, and that creditors' interests become more important as the position worsens. Hold frequent board meetings, obtain up-to-date cash-flow forecasts, take early professional advice and record the reasons for continuing to trade. Our insolvency advice for directors team and our guide to wrongful trading explain the risks.
Treating fraud prevention as a policy document
The failure to prevent fraud offence applies to large organisations that meet two of three criteria: more than 250 employees, more than £36 million turnover and more than £18 million in total assets. The defence requires reasonable fraud prevention procedures, which means a risk assessment, proportionate controls, top-level commitment, communication, training and monitoring. A policy that nobody has read will not be enough. Boards should own the risk assessment, receive regular reports and test that procedures work across subsidiaries and associated persons.
Informal handling of conflicts
In owner-managed companies, directors often deal with the company through their own businesses or family members. Every such transaction should be checked against sections 175 and 177 and the member approval rules for substantial property transactions and loans. Failing to declare an interest or obtain approval can make a transaction voidable and expose the director to an account of profits. A simple conflicts register, reviewed at each board meeting, prevents most problems and is persuasive evidence of good faith if a dispute arises later.
Relying on indemnities that do not work
Section 232 of the Companies Act 2006 makes void any provision exempting a director from liability for negligence, default, breach of duty or breach of trust, or indemnifying them against it, except as the Act permits. Permitted routes include directors' and officers' insurance and qualifying third-party indemnities. Indemnities drafted without reference to these limits may be unenforceable when they are most needed. Review deeds of indemnity and insurance cover together, check run-off cover on exit, and make sure overseas parent guarantees do not conflict with the statutory restrictions.
Cross-border governance and the Bangladesh connection
International groups face overlapping governance rules. A UK subsidiary of a Bangladeshi, Gulf, Singaporean or Chinese group must meet English-law requirements even where strategy is set abroad. Equally, UK parents with overseas subsidiaries must respect local company law, which may impose different board composition, residency and filing rules.
TRW & Co is headquartered in Dhaka, so we regularly advise Bangladeshi groups on running UK companies and UK groups on Bangladeshi subsidiaries. In Bangladesh, companies are governed by the Companies Act 1994, and listed companies are subject to governance requirements set by the Bangladesh Securities and Exchange Commission. Our Bangladeshi businesses in the UK page covers setting up and running a UK presence.
For corporate governance lawyers London is also where multinational policies are often designed. Group-wide anti-bribery, sanctions and fraud prevention frameworks need local adaptation, because "associated persons" and senior managers abroad can create UK criminal exposure. Our anti-bribery and corruption team advises on group procedures.
How TRW & Co's corporate governance lawyers in London help
We advise boards, non-executive directors, company secretaries, investors and individual directors. We do not promise outcomes, but we aim to give clear, practical advice that boards can act on.
Board advisory
Advice on directors' duties for specific decisions, including transactions, dividends, restructurings and stakeholder issues. We help boards prepare papers and minutes that show proper consideration.
Constitutional documents
Drafting and updating articles, shareholders' agreements, board charters, terms of reference and delegated authority frameworks for private, investor-backed and group companies.
Compliance frameworks
Reviewing fraud prevention, anti-bribery and internal control procedures, and preparing for Provision 29 declarations and Companies House identity verification.
Directors in difficulty
Advising individual directors facing conflicts, removal, investigations, disqualification proceedings or claims. Where advocacy in the higher courts is required, we instruct specialist counsel.
Where governance failures turn into disputes, we work with our shareholder disputes colleagues. You can browse our practice areas or contact our London office at Holborn Gate, 330 High Holborn, London WC1V 7QH, or by email at info@trw.co.
Accountability: disqualification and personal liability
Directors who fall short of their duties face several forms of personal exposure. The company, or a liquidator or administrator, can sue for breach of duty. Shareholders may bring a derivative claim with the court's permission. Insolvency practitioners can pursue wrongful or fraudulent trading claims and misfeasance proceedings.
The Company Directors Disqualification Act 1986 allows the court to disqualify unfit directors of insolvent companies, and the Insolvency Service can accept disqualification undertakings instead of court proceedings. Disqualification prevents a person acting as a director or being concerned in the management of a company without the court's permission, and breaching it is a criminal offence.
Corporate governance lawyers London directors approach early can often reduce this exposure by helping the board document its reasoning, take timely advice and correct procedural defects before they become evidence of unfitness.
Reform outlook for 2026
The governance agenda continues to move. In early 2026 the government announced that it would not proceed with the planned audit reform and corporate governance bill, so the FRC remains the main standard setter and the proposed new regulator will not be created in that form for now. Companies House reforms are being rolled out in phases, and further transparency measures under the 2023 Act are still being commenced.
Boards of listed companies should focus on Provision 29 readiness, while large private companies should check their governance statements and fraud prevention procedures. Corporate governance lawyers London businesses retain should track commencement dates rather than relying on announcements alone.
Checklist for decision-makers
Use this checklist to test your company's governance. Corporate governance lawyers London clients engage typically start a review here.
- Do our articles and shareholders' agreement reflect how the business is actually run and funded today?
- Has every director and person with significant control completed Companies House identity verification?
- Do we have a written schedule of reserved matters and delegated authorities, and is it followed?
- Are conflicts declared, authorised and minuted properly?
- Do board papers and minutes show that section 172 factors were considered on major decisions?
- If we are a large organisation, do we have reasonable fraud prevention procedures with board oversight?
- Would our directors recognise the point at which creditors' interests must be considered?
- Are directors' indemnities and D&O insurance aligned and adequate, including run-off cover?
- Do subsidiary boards exercise independent judgement and keep their own records?
- If listed, are we ready to make the Provision 29 declaration for the relevant financial year?
Frequently asked questions
01What are the main duties of a company director in the UK?
The Companies Act 2006 sets out seven general duties in sections 171 to 177: act within the company's powers, promote the success of the company, exercise independent judgement, exercise reasonable care, skill and diligence, avoid conflicts of interest, not accept benefits from third parties, and declare interests in proposed transactions. Directors also have specific statutory obligations, such as filing accounts and keeping registers, and must consider creditors' interests when the company is insolvent or close to it. The duties are owed to the company itself.
02Does the UK Corporate Governance Code apply to private companies?
No. The UK Corporate Governance Code 2024 applies on a comply-or-explain basis to companies in the commercial companies and closed-ended investment funds listing categories. Very large private companies must instead publish a statement of their governance arrangements under the Companies (Miscellaneous Reporting) Regulations 2018, and many use the Wates Principles to do so. Smaller private companies have no code obligation, but investors often require governance standards by contract through shareholders' or investment agreements.
03What is Provision 29 of the UK Corporate Governance Code?
Provision 29 requires the board to monitor the company's risk management and internal control framework and, at least annually, review its effectiveness. The annual report must include a declaration on the effectiveness of material internal controls at the balance sheet date, and describe any material controls that were not operating effectively. It applies to financial years beginning on or after 1 January 2026, so affected boards should already be testing their controls and evidence.
04Who is caught by the failure to prevent fraud offence?
The offence under the Economic Crime and Corporate Transparency Act 2023 applies to large organisations, meaning those meeting two of three criteria: more than 250 employees, more than £36 million turnover and more than £18 million in total assets. An organisation can be liable where an associated person, such as an employee, agent or subsidiary, commits a specified fraud intending to benefit it. The defence is to show reasonable fraud prevention procedures were in place. The offence came into force on 1 September 2025.
05Can a director be personally liable for company debts?
Generally no, because a company is a separate legal person. However, directors can become personally liable in specific cases: wrongful or fraudulent trading, misfeasance, breach of duty, personal guarantees, certain tax liabilities, and acting while disqualified. The creditor duty, confirmed by the Supreme Court in BTI v Sequana, also means directors must consider creditors' interests as insolvency approaches. Early advice, regular board meetings and good records are the best protection.
06How should a director handle a conflict of interest?
First identify whether it is a situational conflict under section 175 or an interest in a transaction under section 177. Situational conflicts in private companies can usually be authorised by the independent directors unless the articles say otherwise. Interests in proposed transactions must be declared before the company enters into them. Check whether the articles let the conflicted director vote and count in the quorum, and whether shareholder approval is needed for substantial property transactions or loans. Record everything in the minutes and conflicts register.
07What has changed for Companies House filings?
The Economic Crime and Corporate Transparency Act 2023 gave Companies House new powers and introduced identity verification. Since 18 November 2025, new directors must verify their identity before appointment, and existing directors and people with significant control are being brought into the regime over a transition period, usually linked to the next confirmation statement. Acting as a director without verification is an offence. Companies should keep a verification log and check it before each confirmation statement.
Sources and official materials
- Companies Act 2006, Part 10 — Directors' general duties and transactions requiring member approval
- UK Corporate Governance Code 2024 (FRC) — Code, effective dates and Provision 29
- Companies (Miscellaneous Reporting) Regulations 2018 — Section 172 statements and large private company governance statements
- Economic Crime and Corporate Transparency Act 2023 — Identity verification, failure to prevent fraud and identification doctrine
- Offence of failure to prevent fraud: guidance (GOV.UK) — Government guidance on reasonable procedures
- Verifying your identity for Companies House (GOV.UK) — Who must verify and how
- BTI 2014 LLC v Sequana SA [2022] UKSC 25 — Supreme Court judgment on the creditor duty
- Company Directors Disqualification Act 1986 — Disqualification of unfit directors
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.