Directors duties & liabilities Survey by ecoDa and Allen & Overy
How are directors’ liabilities implemented in practice in the various jurisdictions in Europe? What are the main differences and commonalities among the legal frameworks and the case-law? What are the best practices for directors to comply with their duties and to mitigate their risks, in particular in the context of sustainability?
A new survey from Allen & Overy, a leading international law firm and ecoDa, the European Confederation of Directors’ Associations, answers these questions and analyses what directors’ liability exactly entails in 15 different European jurisdictions. GUBERNA also provided input on the Belgian case.
Indeed, directors’ duties and liabilities have become a hot topic in the wake of new regulations in the field of sustainability, which directly impact directors’ responsibilities and exposure. An example is the Corporate Sustainability Due Diligence Directive (CS3D) currently under negotiation at European level.
The main lessons learned from the survey are the following:
- The survey reveals a complex and diverse landscape of legal rules and practices across different jurisdictions, reflecting different corporate governance models, legal traditions and policy choices.
- It also indicates that the increased attention to corporate social responsibility (CSR) in recent years has not fundamentally altered the legal framework of directors' duties and liabilities, but that it may expand the range and intensity of the challenges and expectations that directors face in practice.
- Concerns may be raised about the possible adverse consequences of the increased focus on directors' liability, both for the individuals involved and for the functioning and performance of the companies they lead or oversee. For instance, the heightened liability risk may deter qualified and competent persons from accepting or retaining directorships. It may also induce directors to adopt a defensive or intrusive approach to management.
