The sanctions range from fines to disqualification or even imprisonment. And the courts will no longer accept ignorance as an excuse. Now the perception is that directors will be responsible for the conduct of the management of the company's affairs. The price of failing to control risks can be high. It may have been a sole trader who brought down Barings Bank, but10 directors were disqualified as a result.
Boards have a collective responsibility.
In fact, the only explicit duty a director owes is to the company - in effect, a requirement to act in the best interests of shareholders, unless the company hits financial problems and creditors' interests come to the fore. The Companies Act also imposes some duties in relation to employees. Trade unions and a range of pressure groups argued that directors should have a direct legal duty to employees, customers and any other significant stakeholders. But the government has indicated it does not support this pluralist approach. This would make it clear that the duty to act in the best interests of the company requires taking into account the impact of actions on employees, customers, suppliers, the environment and local communities.