Directors’ case studies on their wider section 172 responsibilities

ICAS has published a collection of case studies to support the application of directors’ section 172 duties.

Our publication consists of real-life case studies that have been gathered from a wide range of CAs in their capacity as board members in both private and listed companies. They outline the judgements board members applied and how different aspects of section 172 were considered.

The aim is to illustrate good practice application of the directors’ duty to promote the success of the company through sharing their experiences in terms of how they navigated business decisions.

The primary duty of directors, as set out in section 172 of the Companies Act 2006, is to promote the success of the company. Acting for the benefit of shareholders is not the directors’ sole duty. A greater consideration of other factors relevant to a range of stakeholders is encouraged as part of the decision-making process.

The following issues are important for corporates and underpin what section 172 aims to do:

• building trust in business and demonstrating that business is doing the right thing;
• anticipating and managing public challenge, reputational impact and scrutiny; and
• building and embedding wider stakeholder engagement into decision-making,
  not just relying on a purely shareholders-centric perspective.

The case studies cover a range of scenarios from the following themes:

• managing cost reductions;
• investment and growth;
• stakeholder and reputation management;
• supporting longer-term success;
• effective governance – managing challenges to exert influence; and
• environment, social and governance issues (ESG)

You can use our index on page 8 of the guide to navigate to the case study you are interested in.