Directors beware

Directors who fail to take reasonable steps to prevent and detect fraud in their company may find themselves personally liable to account to the company even if they do not benefit from and are not involved in the fraud, write Andrew Keltie and Charles Thomson of Baker & McKenzie.

Andrew Keltie (+44 (0)20 7919 1376, andrew.keltie@bakernet.com) is a partner and Charles Thomson (+61 2 8922 5490, charles.thomson@bakernet.com) is an associate of Baker & McKenzie LLP.

For many centuries it has been recognised that a company is distinct from its directors, shareholders and officers. Directors have been able to conduct the business of the company without fear of personal liability if things do not go as planned.