The directors are ultimately responsible for the management of the company and have the power to cause it to act in particular ways, such as entering into contracts or refraining from acting in particular ways. They are, therefore, responsible for ensuring that the company complies with all laws that apply to the company.
Many laws apply to companies generally, including laws on data protection, employment, health and safety and tax. The applicability of some laws or regulations depends upon the size or other characteristics of company (for example, whether or not it is subject to regulation). For instance, listed companies are subject to regulation on, among other things, the issue of securities and the ongoing provision of information to the market; banks are subject to prudential regulation, as are insurance companies. The possible permutations are endless and directors are therefore advised to be familiar, not only with the business of their company, but also with the regulatory environment in which it operates.