Feeds

UK's listed firms must tell markets of serious executive problems

Shareholders need to know about sickness

  • alert
  • submit to reddit

Security for virtualized datacentres

Stock market-listed companies have a duty to inform shareholders if an executive's illness threatens to affect the firm's performance, a company law expert has said. That duty does not bind unlisted UK firms, he said.

In the wake of Apple's revelations about chief executive Steve Jobs's illness one expert has said that UK firms whose shares trade on the public markets should ensure that the markets are told about any illness or circumstance that might impair the performance of a crucial executive.

"Companies have a duty to disclose anything that might have an impact on the company's financial performance or change its prospects," said Andrew Hornigold, a corporate law expert at Pinsent Masons, the law firm behind OUT-LAW.COM.

Speculation has surrounded Jobs's health for a year, and the private Apple founder has just published the details of a treatable hormone condition that has been the cause of recent lost weight.

The issue was significant for Apple because its periods of success as a company have been closely associated with Jobs's stewardship. Industry observers believe that company shares would suffer if Jobs were suddenly not in a position to run the company.

"Directors of any company have a duty of care, skill and diligence to the company," said Hornigold. "This could extend to directors ceasing to hold office if personal issues meant that they could no longer perform their functions."

While unlisted companies would have to remove any director whose personal circumstances meant they could not fulfil their duties, they would be under no duty to inform shareholders about those circumstances.

The situation is different for listed companies because the status and historic performance of an individual could affect the value of his employers' shares," said Hornigold. "Stock markets demand that any information whose disclosure would lead to a substantial movement in shares is disclosed. This could include information about personal issues facing key directors or executives."

Hornigold said that some financial activity has obviously rested on the status of single individuals in the past. "We have seen this in the football industry, where the sale of a club has been impacted by whether a manager or player will stay or go," he said.

In more mainstream business, Hornigold said that it was most likely to be an issue in creative businesses where the ideas of an single executive can make a huge impact.

"This can really be the issue where creative people are involved. In fields such as computer game design, for example, the value of a company can be very closely tied up with individual people," he said.

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Security for virtualized datacentres

More from The Register

next story
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.