It is important to remember that the family business is a legally separate entity and that it is your responsibility to act professionally in the company’s best interests. All company directors must adhere to the Chartered Directors’ Code of Professional Conduct requirements, which sets out the standards of good practice for directors.
The Code of Professional Conduct requires directors to:
- Exercise leadership, enterprise and judgement to ensure the company’s prosperity and act in its best interests.
- Ensure the responsibilities of the board are clear and understood, be diligent and acquire a broad knowledge of the company’s business and the statutory and regulatory requirements affecting company direction.
- Follow the standards of good practice in the Institute of Directors’ competency framework, attend all board meetings and ensure adequate audit scope.
- Establish the company’s vision, mission and values, set strategy, delegate appropriately to management, and hold itself accountable to shareholders and other stakeholders.
- Comply with relevant laws, regulations and codes of practice, refrain from anti-competitive practices, and honour obligations and commitments.
- Evaluate their actions in a broader social context and be conscious of the impact of their business on society.
- Ensure open access between the board and auditors, provide adequate audit scope, and fully cooperate with management and any internal auditors.
- Serve the legitimate interests of the company’s shareholders, communicating with them and ensuring that the company is financially viable and adequately managed.
- Respect the interests of all relevant individuals and groups with a legitimate interest in achieving company objectives, and manage those relationships effectively.
- Follow fundamental ‘good citizen’ values, such as respect for the truth and acting honestly. • Be prepared to disagree with board colleagues, including the chair, CEO or MD, and take the conversation ‘offline’ as necessary.
- Refrain from making improper use of confidential information acquired as a director.
- Refrain from buying or selling shares while possessing confidential information.
- Play fair with other directors and their reputations, and refrain from doing anything to bring others’ reputations into disrepute.
- Keep current with promising practice developments to ensure their expertise remains current and relevant.
- Use common sense in applying the spirit of the Code and consistently meeting high standards.
- Remember that the standards and conduct of directors in their private lives will always have a bearing on their reputation as board members.
- Understand that reputation takes a lifetime to build and a few seconds to damage or destroy.