corporate accountability

By Simon Baskerville, David Berman, Farah O’Brien and Alex Hewett

Corporate accountability has been a key focus for UK legislators and regulators since the credit crisis, as authorities have taken action against corporate failings. In our view, this focus is evolving to emphasise individual accountability. Developments enacted by the Small Business, Enterprise and Employment Act (SBEE) and forthcoming changes to the Senior Managers and Certification Regime (SMCR) both seek to hold individuals to account, increasing the level of personal risk for PE executives.

New Dynamics to Encourage and Incentivise Claims Against Directors of Insolvent Companies

Changes enacted by the SBEE are expected to increase the likelihood of claims against PE executives sitting on portfolio company boards. While government has not sought to change the law on directors’ duties, it has responded to criticism for not formally holding more directors to account, by lowering barriers to individual enforcement action. Liquidators and administrators can now sell claims against directors to any person, including claims for fraudulent and wrongful trading, transactions at an undervalue, and preferences.