An important reminder on good governance and overseeing risks
The Institute of Directors (IoD) said the High Court’s decision on the Mainzeal Property and Construction case released today highlights the importance of good governance and of the key role of boards to oversee organisational risk.
“This is an important reminder about core director duties under the Companies Act including not trading while insolvent,” says IoD CEO Kirsten Patterson.
In addition, Ms Patterson says another lesson is that governance in a global context can be complicated and complex, which brings additional risks.
“It is a timely reminder for directors to ensure that they have a good understanding of the wider operating environment, and the risks in that environment.
“It is important to have formal procedures in place for overseeing risks such as having audit committees and a formal risk register.
“This also highlights that being a director can carry a high level of personal risk along with responsibility.
“IoD will share the learnings from this case with members to help ensure the director community are up-to-date on best practice governance.”