Private Member’s Bill set to shift corporate culture and board member priorities

On 16 January 2026 there will be a second reading of a Private Member’s Bill amending the duties owed by directors, called the Company Directors (Duties) Bill.

Currently the primary duty of directors as set out in the Companies Act 2026, is to promote the success of the company for the benefit of its shareholders.

The Act requires directors to have regard for a number of other factors in carrying out that primary duty, including the interests of employees and the environment, but in essence – as currently drafted – the Act enshrines the idea of “shareholders first”.

This Bill aims to change that. If passed, it will remove the clause that, in practice, means that  the interests of shareholders are paramount. It will replace that with new wording saying that directors have to act in way that promotes the success of the company for the benefit of shareholders, workers and the environment. All these groups would have an equal right, so shareholder interests would no longer be the most important.

That would be a huge shift for corporate culture in the UK and would require boards to think in a very different way.

Equal priority

There are some good arguments for the Bill.

The new approach would reflect the important role business plays in society. Whilst generating returns for shareholders is important, many people believe that this should not come at the cost of paying fair wages, protecting the environment or investing in innovation.

Public trust in business is low and people often feel business prioritises the wrong things, favouring increased shareholder returns over better pay and conditions for employees.

Changing directors’ duties to reflect employees and the environment as key stakeholders alongside shareholders would allow directors to take decisions that benefit staff and protect the environment rather than simply providing shareholder returns.

In addition, it’s argued that this would send out an important message that successful businesses benefit all members of society, not just the owners of the business.

Impact on decision-making

There are, however, many who feel that the changes proposed are a bridge too far.

Some feel moving away from the current “shareholders first” approach will make decision making more difficult for directors and expose them to greater risk of litigation if employees or environmental groups feel their interests have not been properly protected.

That will of course lead directors to be more cautious and will discourage the commercial risk-taking we may need to allow innovation and economic growth.

The current law already allows directors the discretion to take into account employee and environmental interests if they believe they promote the long term interests of shareholders, whereas the new Bill puts in place a much more rigid framework. There is also a strong view that in order to encourage the growth in the economy that is needed, businesses require the ability to operate as they see fit and putting in place further restrictions on top of the recent changes to employees’ rights is overkill.

It’s unlikely that the Bill will pass but business owners are very concerned about a perceived “anti-business” direction of travel.

Business confidence is low and many SME business owners feel that running a business is becoming increasingly difficult in the UK. Soon we may reach a point where many take the view that the risks outweigh the potential rewards. Given that politicians are agreed we need growth in the UK economy in 2026, that outcome is really not in anyone’s interests.