Company Directors' responsibilities
Who can become a Company Director
Anyone can become a company director of a limited company provided they:
- have not been restrained by court order from becoming a company director
- are not an un-discharged bankrupt
- are not subject to UK government restrictions
- are aged 16 or over
If you're a new company director take a look at our training DVD for company directors for only £59 plus VAT and with free post and packaging.
More info or 
How to become a Company Director
Company Directors are appointed by the owners (shareholders) of a limited company and must be registered and listed as a company director at Companies House. For smaller companies the shareholders are often also the directors.
If you are a sole trader it is widely accepted that you can call yourself a 'director' of your company. However, for limited companies the duties directors are responsible for undertaking are specifically laid out in the Companies Act 2006 and came fully into force in October 2008.
Company Directors' duties and responsibilities
Company directors are appointed by and are answerable to the shareholders (owners) of the company. However, as a result of the Companies Act 2006, company directors responsibilities are now specified in law (these new statutory duties of company directors are set out in Part 10 of the Companies Act 2006).
As well as these legal responsibilities, being a company director brings with it several other important directors responsibilities, such as health and safety of employees, making purchases and entering into credit arrangements on behalf of the company, and ensuring certain documents are submitted on time to the Registrar at Companies House.
If you're a new company director take a look at our training DVD for company directors for only £59 plus VAT and with free post and packaging.
More info or
Statutory Company Directors responsibilities
The Companies Act states that the role of directors is to act in a way which they consider most likely to promote the success of the company for the benefit of its shareholders as a whole and that, in doing so, they will need to have regard where appropriate to long term factors, the interests of other stakeholders and the community, and the company’s reputation. There is particular focus on the area of conflicts of interest.
There are now eight general board duties specified as a company director's role. Company directors must:
- Act within their powers and in accordance with the company’s constitution
- Promote the success of the company for the benefit of shareholders, paying due regard to
the likely consequence of any decision in the long term
the interests of the company’s employees
the need to foster the company’s business relationships with suppliers, customers and others
the impact of the company’s operations on the community and the environment
the desirability of the company maintaining a reputation for high standards of business conduct
- Exercise independent judgment
- Exercise the reasonable care, skill and diligence that would be expected by a person in that position in a company of that size (eg an experienced non-executive director would have higher standards expected of them than a more inexperienced executive, but there is a minimum expectation of any director).
- Avoid conflicts of interest, including conflicting multiple directorships
- Not accept benefits from third parties. Note that this does not necessarily include a director receiving a benefit from a person or company which provides services to the company. A more difficult area is the giving or receipt of corporate hospitality so it's often advisable to put a policy in place regarding the limits on what can be received.
- Declare interests in proposed transactions or arrangements. Note that a director may not necessarily be party to the transaction or arrangement to be ‘interested’ in it.
- Seek external advice where necessary, particularly if the company is in financial difficulty.
The documents required by Companies House
All the company directors have a joint responsibility to ensure certain documents are submitted to the Registrar at Companies House on time and in a format that can be scanned. Failure to provide this information to the Registrar within the proper timescales is punishable by fine or imprisonment. The documents in question are:
- The Annual Accounts
- The Annual Return
- Any notices regarding change of directors, company secretary, registered office address or accounting reference date, and notification of allotment of shares, any special resolutions and details of any security for payment of a debt (a ‘mortgage’ or a ‘charge’) created by the company.
Remember that even if you use an accountant or a financial adviser, neither of them is legally responsible for making sure this information reaches the Registrar. That is solely the directors responsibility.
Annual Accounts
These must be filed every year with the Registrar for all limited companies, whether or not the company is actually trading. Annual accounts must include:
- a profit and loss account (or income and expenditure if it’s a CIC or otherwise not trading for profit)
- a balance sheet signed by a director
- a director’s report signed by a director or the company secretary
- if the company’s turnover is in excess of £5.6 million or its balance sheet totals more than £2.8 million it will also need to provide an Auditor’s report from a qualified Auditor.
The Annual Return
Completing the annual return is a much simpler exercise than the annual accounts. It confirms general information about the company at that given point in time, such as the directors’ and company secretary’s names, the registered office address, and the names of the shareholders and the number of shares they each hold.
What happens if the annual accounts or annual return are late
If the annual accounts or annual return are not delivered at the appropriate time all the directors of the company could be prosecuted and fined (up to £1500 for a limited company and £7500 for a PLC). The amount of penalty increases according to how late the return is, with a faster rate of increase applied to companies who file more than one month late. If a company files late 2 years in a row they will incur double the penalty in the second year.
Companies House reports that on average over 1000 directors are prosecuted every year for failing to deliver the annual accounts or the annual return on time, so write a date in your diary and give you and your accountant plenty of time to prepare the required information.
Related articles:
Company Secretary responsibilities
Workplace health and safety training DVDs
Fire Safety training DVDs
Company Directors Role and Company Directors Responsibilities - DVD
Company Directors' responsibilities
Who can become a Company Director
Anyone can become a company director of a limited company provided they:
- have not been restrained by court order from becoming a company director
- are not an un-discharged bankrupt
- are not subject to UK government restrictions
- are aged 16 or over
If you're a new company director take a look at our training DVD for company directors for only £59 plus VAT and with free post and packaging.
More info or
How to become a Company Director
Company Directors are appointed by the owners (shareholders) of a limited company and must be registered and listed as a company director at Companies House. For smaller companies the shareholders are often also the directors.
If you are a sole trader it is widely accepted that you can call yourself a 'director' of your company. However, for limited companies the duties directors are responsible for undertaking are specifically laid out in the Companies Act 2006 and came fully into force in October 2008.
Company Directors' duties and responsibilities
Company directors are appointed by and are answerable to the shareholders (owners) of the company. However, as a result of the Companies Act 2006, company directors responsibilities are now specified in law (these new statutory duties of company directors are set out in Part 10 of the Companies Act 2006).
As well as these legal responsibilities, being a company director brings with it several other important directors responsibilities, such as health and safety of employees, making purchases and entering into credit arrangements on behalf of the company, and ensuring certain documents are submitted on time to the Registrar at Companies House.
If you're a new company director take a look at our training DVD for company directors for only £59 plus VAT and with free post and packaging.
More info or
Statutory Company Directors responsibilities
The Companies Act states that the role of directors is to act in a way which they consider most likely to promote the success of the company for the benefit of its shareholders as a whole and that, in doing so, they will need to have regard where appropriate to long term factors, the interests of other stakeholders and the community, and the company’s reputation. There is particular focus on the area of conflicts of interest.
There are now eight general board duties specified as a company director's role. Company directors must:
- Act within their powers and in accordance with the company’s constitution
- Promote the success of the company for the benefit of shareholders, paying due regard to
the likely consequence of any decision in the long term
the interests of the company’s employees
the need to foster the company’s business relationships with suppliers, customers and others
the impact of the company’s operations on the community and the environment
the desirability of the company maintaining a reputation for high standards of business conduct
- Exercise independent judgment
- Exercise the reasonable care, skill and diligence that would be expected by a person in that position in a company of that size (eg an experienced non-executive director would have higher standards expected of them than a more inexperienced executive, but there is a minimum expectation of any director).
- Avoid conflicts of interest, including conflicting multiple directorships
- Not accept benefits from third parties. Note that this does not necessarily include a director receiving a benefit from a person or company which provides services to the company. A more difficult area is the giving or receipt of corporate hospitality so it's often advisable to put a policy in place regarding the limits on what can be received.
- Declare interests in proposed transactions or arrangements. Note that a director may not necessarily be party to the transaction or arrangement to be ‘interested’ in it.
- Seek external advice where necessary, particularly if the company is in financial difficulty.
The documents required by Companies House
All the company directors have a joint responsibility to ensure certain documents are submitted to the Registrar at Companies House on time and in a format that can be scanned. Failure to provide this information to the Registrar within the proper timescales is punishable by fine or imprisonment. The documents in question are:
- The Annual Accounts
- The Annual Return
- Any notices regarding change of directors, company secretary, registered office address or accounting reference date, and notification of allotment of shares, any special resolutions and details of any security for payment of a debt (a ‘mortgage’ or a ‘charge’) created by the company.
Remember that even if you use an accountant or a financial adviser, neither of them is legally responsible for making sure this information reaches the Registrar. That is solely the directors responsibility.
Annual Accounts
These must be filed every year with the Registrar for all limited companies, whether or not the company is actually trading. Annual accounts must include:
- a profit and loss account (or income and expenditure if it’s a CIC or otherwise not trading for profit)
- a balance sheet signed by a director
- a director’s report signed by a director or the company secretary
- if the company’s turnover is in excess of £5.6 million or its balance sheet totals more than £2.8 million it will also need to provide an Auditor’s report from a qualified Auditor.
The Annual Return
Completing the annual return is a much simpler exercise than the annual accounts. It confirms general information about the company at that given point in time, such as the directors’ and company secretary’s names, the registered office address, and the names of the shareholders and the number of shares they each hold.
What happens if the annual accounts or annual return are late
If the annual accounts or annual return are not delivered at the appropriate time all the directors of the company could be prosecuted and fined (up to £1500 for a limited company and £7500 for a PLC). The amount of penalty increases according to how late the return is, with a faster rate of increase applied to companies who file more than one month late. If a company files late 2 years in a row they will incur double the penalty in the second year.
Companies House reports that on average over 1000 directors are prosecuted every year for failing to deliver the annual accounts or the annual return on time, so write a date in your diary and give you and your accountant plenty of time to prepare the required information.
Related articles:
Company Secretary responsibilities
Workplace health and safety training DVDs
Fire Safety training DVDs
Company Directors Role and Company Directors Responsibilities - DVD