Listed companies are under increasing pressure from the media and Essay

Listed companies are under increasing pressure from the media and politicians to behave ethically. In recent months, c - Essay Example 7 Conclusion 10 References 11 Introduction In the modern day perspective, a director’s role is considered to be quite significant when concentrating upon the success factors or driving forces which can derive sustainable growth for a company. In the recent past, many occurrences have revealed the lack of ethical concerns, and the discrepancies persisting in the directors’ performances of listed companies owing to which the companies have been witnessing increasing pressure from the community including the media and even the politicians with relation to their ethical commitment and ‘green’ initiatives. It is in this context that Section 172 of the Companies Act 2006 tends to play a major role in directing the roles and the responsibilities of the directors to preserve the success and the interests of the corporate being treated as two separate entities. However, in light of the prevailing occurrences of unethical conducts by directors as against the interest s of the company, it can be argued that certain amendments are required in the provisions mentioned under Section 172 of the Companies Act 2006. This paper aims at arguing on the basis of this particular aspect with reference to few case laws. Ethical responsibilities of A Director Under Section 172 Of The Companies Act 2006 The Companies Act 2006 is one of the major legislations, which governs the companies’ activities within the business periphery of the UK. It is one of the longest legislations, which has been passed in the UK with a large number of sections by its name. The main aim of the law is to modernise along with simplify the prevailing Companies Act in the UK. Moreover, it has been observed that this law is also meant to codify the duties of the directors in the companies. Furthermore, this Act would also grant much improved rights to shareholders of companies and it would also be effective in limiting the managerial burdens carried by the companies operating in t he UK1. One of the crucial impacts of the Companies Act 2006 is on the managers of the UK companies. The duties of the directors of the companies are codified with the emergence of this Act. It has been observed from the Section 172 of the Companies Act that the directors of the companies need to appreciate their duties towards organisations. The directors should work for the best interest of the companies. The directors should have to perform keeping in mind the ethical considerations. In this regard, the director should not accept any kind of benefits from any of the third parties. It would be unethical to the company if they perform activities in that manner. It has been evidently mentioned in the Companies Act that the directors would not be allowed to take any type of benefits from any of the third parties as it may harm organisations. Moreover, it has been viewed from Section 172 of the Act that the directors of organisations must act in a way that would said to be done in a g ood faith and to support the success relating to the company by considering the success of the interests of the members associated with it [Aberdeen Railway Co v Blaikie Brothers]2. Additionally, it is the duty of the directors of organisations to think about the long-term consequences of his/her decisions which are also ethically important. Furthermore, it has also been assumed from Section 172 of the Act that the directors would also have to keep in mind the welfare or interests of the employees of organisations and do