An examination of director’s duties in light of the VW emissions scandal

10th November 2015

director’s duties

A resignation at the top of VW illustrates the importance of satisfying your duties as a director of a company.

Company directors have a duty (amongst others) to be diligent and keep themselves informed of the company’s affairs. When determining if a director has satisfactorily complied their duties, regard will be given to their professional knowledge and experience, if any, and to any professional advice they received on a particular matter. It is quite reasonable to seek advice from, and rely on the experience of, your colleagues, but this does eradicate the director’s individual responsibility.

The responsibility of governing the company is in the hands of the directors. It is vitally important that directors understand the regulatory frameworks in which their businesses operate, otherwise it is possible to expose themselves to personal risk. The VW emissions scandal reaffirms the importance of understanding and abiding by corporate governance principles (being the ways in which companies are directed and controlled).

It is for this reason that VW’s claim of ignorance and mercy at the hands of “rogue” software engineers has fallen on deaf ears. An organisation as profitable and well-known as VW is assumed to be, and obliged to be, abiding by all laws and regulations. A piece of software embedded into the normal software put into the majority of its cars is something a director should be aware of, or at the very least it suggests that internal checks on the cars were not sufficiently stringent (with the directors being the people with ultimate responsibility for instigating such checks).

If you wish to discuss any of the issues raised in this article or would like assistance with updating your terms of business please contact Chris Wills, Director, on 01872 226992 or chris@murrellassociates.co.uk.

The information provided in this article is for general information purposes only and does not constitute legal or other professional advice and cannot be relied upon as such. Any law quoted in this article is correct as at 27 November 2015. Appropriate legal advice should be sought for specific circumstances before any action is taken. Copyright © Murrell Associates Limited, November 2015.