The role and responsibilities of a company director

A company director has a very important role. They’re responsible for managing day-to-day activities and finances, ensuring all statutory filing obligations are met and that the company is being run in accordance with the Companies Act 2006, the articles of association and your shareholders’ agreement (if you have one).

Appointing a company director shouldn’t be taken lightly. A great deal of trust goes into the role because directors must act lawfully and honestly. You also want to ensure you appoint someone who shares the vision of your company’s direction and who can ultimately lead you to success.

The duties of a company director

Company directors are legally responsible for running the company and ensuring that information is sent to Companies House on time.

This includes:

• The confirmation statement
• Annual accounts (even if the company is dormant)
• Any change in the company’s officers or their personal details
• A change to the company’s registered office address
• An allotment of shares
• The registration of any charges (mortgage)
• Any change in the company’s people with significant control (PSCs) or their personal details

While you can hire an accountant to help manage your company, you’re still legally responsible for the business’s records, accounts and performance. It’s also very important that you keep up to date with any changes to UK company law.

The Companies Act 2006 details further legislation which a company director must adhere to. As a director, you must:

• Act within designated powers
• Promote the success of the company
• Exercise independent judgment
• Exercise reasonable care, skill and diligence
• Avoid conflicts of interest
• Not accept benefits from third parties
• Declare interests in proposed or existing transactions or arrangements with the company

It’s a common misconception that the money a company earns and has in its bank account belongs to the director. Please note however that this is not correct. You’re merely acting as an officer of the company, and it’s your duty to ensure that the funds in the company are sufficient to enable the company to settle its debts and provide cashflow for future projects.

You can find out more about the Companies Act 2006 on the legislation.gov.uk website.

If you need help appointing or managing the responsibilities of a company director, please get in touch and we can help. You can also head to gov.uk for further tools, advice and information.