D&O Market Update -
Latest News on the Companies Act 2006

The Companies Act 2006 ("the Act") is a mammoth piece of legislation.  With 1,300 sections and 16 schedules, it is reported to be largest single piece of legislation ever passed in the UK.

The Act replaces or restates most of the old Companies Acts of 1985 and 1989, while codifying the duties owed by directors to companies, previously to be found in case law.  It also introduces certain amendments to the procedure by which litigation may be brought for breach of directors' general duties, in particular with respect to the pursuit of derivative claims by members.

Commencement of the Act is in stages. Many of the changes relating to directors' duties were implemented last year, but certain sections are to come into effect only on 1 October 2008, most notably concerning conflicts of interest.

The attached booklet for the benefit of underwriters, brokers and claims handlers in the D&O insurance market re-caps what has happened so far and explains in more detail the implications of the sections about to come into force next week.