Criminal liability Economic sanctions Reporting
Section 414D provides that the strategic report must be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company. This section holds every director of the company liable for the approval of a report that does not comply with the requirements of the Act, insofar as they knew that the report did not comply, or were reckless as to whether it did, and failed to take reasonable steps to secure compliance.
This section creates criminal liability for company directors who fail to exercise their duties in relation to the report, and makes such offence punishable by fine.
Section 414D. Approval and signing of strategic report
(1) The strategic report must be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company.
(2) If a strategic report is approved that does not comply with the requirements of this Act, every director of the company who—
(a) knew that it did not comply, or was reckless as to whether it complied, and
(b) failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the report from being approved, commits an offence.
(3) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.”
Law / United Kingdom / Companies Act 2006
The Companies Act 2006 (“CA 2006”) was amended by Regulation 2013/1970, to include provisions requiring the directors of a company (except those falling within the small companies exemption) to prepare a strategic report for each financial year. Quoted companies must include, amongst other things, information about the company’s employees and social, community and human rights issues in their strategic report. This includes information about the company’s policies in relation to these issues.
The purpose of the regulation is to enhance corporate governance and provide shareholders of listed companies with a greater range of information about the company. It is therefore not designed to combat human trafficking. It does however compel listed companies to publicly disclose information about human rights issues affecting their business, allowing for greater scrutiny of their policies.
The strategic report is a public document which must be filed at Companies House. There is a mechanism for enforcement against the company’s directors and they can be fined for non-compliance.