Despite previous suggestions to the contrary, yesterday, PM Theresa May made clear that for the time being at least, Government won’t be dictating who sits on the board of your company.
During her bid to become leader of the Conservative Party she suggested she’d ensure employees and consumers were represented on company boards: “If I’m prime minister, we’re going to change that system – and we’re going to have not just consumers represented on company boards, but employees as well.” She repeated that commitment after her appointment as Prime Minister at her party conference. Yesterday she appeared to backtrack saying, “while it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards.”
So now there will be consultation and many commentators are already predicting the outcome: advisory committees or a director appointed with responsibility for representing the interests of workers at board level. But bearing in mind the existing obligation of directors as mandated by the Companies Act to have regard to the interests of the company’s employees when working to promote the success of the company, is this likely to bring any practical changes? Maybe, maybe not.
For now, the status quo continues: companies are free to follow the old rules for appointing directors to the board. That board can be made up of a few or many and no-one at this stage is telling you who those people can be. The decision is yours.
If you would like to discuss any issues relating to the board of your company or your company more generally, please contact our corporate department at Farleys Solicitors on 0845 287 0939 or complete an online enquiry form.