An induction policy for new directors
Jennifer Adams explains why every company should have an induction process when a new director joins the team, what that process should comprise and gives advice on the contents of an induction 'pack'.
The vast majority of companies registered with Companies House started life as one-director companies and will remain so until the demise of either the director or the company itself.
When such a director does invite another to join, the role of the company’s accountant is to advise where necessary, mindful of the duty of care required not least in advising the parties involved of their legal responsibilities.
Many company directors have no understanding as to what being a director actually entails or of the consequences of getting it wrong. Educating newly appointed directors in such matters was the reasoning behind the main principle of section B4 of the ‘UK Corporate Governance Code 2010’ which states that “All directors should receive induction on joining the Board and should regularly update and refresh their skills and knowledge.” The Code was written for listed companies but the idea of an “induction” is valid for the smaller non-listed company even those with only one or two directors. An accountant can help in the induction process as he will invariably have the background knowledge required both of the history of the company and of company law.
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- Why have an induction
- What comprises a programme
- The induction 'pack'