In this article Turner Little outlines the responsibilities of a company director. Legislation detailed in the Companies Act 2006 lays out the legal requirements of a company director in the UK. If these requirements aren’t fulfilled, your business could be liable to pay penalties.
Broad responsibilities
There are a number of broad responsibilities you’re obligated to adhere as the director of a business. These are:
- Duty to act within powers: You need to submit ‘articles of association and a memorandum’ to the government when you start a firm. As the company’s director, you’re bound to adhere to these rules of running your business at all times whenever it’s reasonable to do so
- Duty to promote success of the business: The Companies Act 2006 binds you as a company director to only take actions that are “most likely to promote the success of the company.”
- Duty to utilise independent judgement: As your firm’s director, you’re legally obligated to make decisions which will make the company itself more successful. You can’t act solely in the best interests of any one individual, shareholders of group of investors.
The duties outlined above are the key responsibilities required s a company director when you establish a business. However, the Companies Act 2006 lists a number of other responsibilities that you must meet as a director.
Avoid conflicts of interest
According to the Companies Act 2006, all company directors must avoid conflicts of interest; failing to meet this obligation can result in serious fines. For instance if you will benefit personally from a deal at the expense of the business, you must act solely in the best interest of your firm. As part of this duty, you’re required to declare any interest you hold in any proposed arrangement or transaction your business is involved with. Failing to do so is a criminal offence and can result in fines.
Exercise reasonable care, skill and diligence
The Companies Act 2006 includes provisions to ensure there’s a standard level of competence for directors operating British businesses. Specifically, as the director you’re required to hold the skills and qualification necessary to run the firm effectively; for example practising necessary care and due diligence when filing tax documents.
Don’t accept benefits from third parties
Under UK law, you can’t start a business and become a company director in order to become involved with third parties for personal gain; this is a criminal offence. You can’t exploit a business relationship or accept hospitality from potential contracts – you must only accept benefits when there’s no possibility for conflict of interest. We’d advise you to assess each benefit on a case-by-case basis to ensure you fulfil this responsibility.
Complete filing obligations
As company director, you’ll be required to file several documents with the government on your firm’s behalf every year. These are your venture’s annual returns, annual accounts, company tax returns and corporation tax payments. Often company directors appoint a secretary, such as an accountant, to complete their business’ filing obligations but you as the company director can also file these documents online with HM Revenue and Customs or utilise a filing service.
Turner Little
As part of our miscellaneous corporate services, Turner Little can both provide you with a company secretary and complete, as well as submit, your business’ annual tax return. Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agents, Registered Bank Intermediaries and Business Consultants, as well as Trust providers.