What does a company director do?
A company director is responsible for overseeing the day-to-day operations and finances of a limited company, ensuring compliance with statutory filing requirements, and managing the company in line with the Companies Act 2006, the articles of association, and any shareholders’ agreement in place.
Directors must act with integrity and in the company’s best interests, using their skills, experience, and judgment to make decisions that benefit the company and its members, whether shareholders or guarantors. Their role is to drive the company towards its primary goals and ensure its overall success.
Role and duties of a company director
The duties and responsibilities of a company director are outlined in the Companies Act 2006, the articles of association, the shareholders’ agreement, and the service contract between the director and the company. The Companies Act 2006 establishes the statutory framework for directors’ duties, comprising seven key obligations:
- To act within the powers granted to them in the articles of association
- To promote the success of the business
- To exercise independent judgement in all decision-making
- To use reasonable care, skill, and diligence at all times
- To avoid or declare any conflict of interest
- To avoid the acceptance of benefits from third parties or using their position to make private profits
- To declare an interest in a proposed transaction or arrangement with the company before it enters into such a transaction
The management duties of a company director
A company’s articles of association offer additional guidance on the rights, duties, and powers of directors, as authorized by shareholders under the Companies Act 2006. These management responsibilities typically include:
- Making decisions that benefit the company and its owners, while also considering creditors’ interests in all decisions.
- Maintaining the company’s registered details and reporting any changes to Companies House and HMRC.
- Keeping statutory company records up to date and accessible for inspection.
- Ensuring accurate accounting records are maintained.
- Monitoring the company’s financial health.
- Taking reasonable steps to minimize losses if the company encounters financial difficulties.
- Filing annual accounts, an annual confirmation statement (formerly known as the annual return), and Company Tax Returns on time.
- Paying Corporation Tax and other tax liabilities by the deadlines.
- Organizing general and board meetings.
- Preparing and distributing minutes from meetings.
- Submitting copies of resolutions to Companies House.
- Appointing necessary professionals, such as solicitors, accountants, and auditors.
- Maintaining company stationery.
- Providing members with copies of the annual accounts.
- Issuing and transferring shares.
- Complying with employment law, if the company has employees.
- Ensuring the health and safety of all employees.
- Appointing a company secretary, if required.
How many directors are required when forming a limited company?
To form a limited company, you need at least one director. While there is no statutory limit on the number of directors a company can appoint, either during incorporation or afterward, there must always be at least one natural person serving as a director.
A single individual can act as both the sole director and shareholder of the company. Alternatively, a company can appoint multiple directors and shareholders at the time of incorporation or add them at any point thereafter.
Who can and cannot be a company director?
A company director can be either an individual or a corporate entity (such as another company). Individuals must be at least 16 years old. However, you cannot appoint a director who:
- is an undischarged bankrupt
- is currently disqualified under a director disqualification order or
- is the company auditor
It is common for shareholders to also serve as directors. However, if you appoint a corporate entity as a director, the company must always have at least one natural (human) director.
Is there a minimum age requirement to be a company director?
A minimum age requirement of 16 was introduced in October 2008 under the Companies Act 2006.
Can a company director also be a shareholder?
Under UK company law, private limited companies can be registered with just one director, who can also serve as a shareholder. This means you can establish and manage a company entirely on your own, fulfilling both roles as the only director and shareholder.
What is the difference between a company director and a shareholder?
A shareholder owns all or part of a company and holds a financial interest in its success. Shareholders appoint directors to oversee and manage the company’s operations and financial responsibilities. Directors are responsible for making key business decisions and ensuring that the company runs smoothly.
Can a company director also be a company secretary?
Yes, a company director can also be the company secretary.
What is the difference between a company director and a company secretary?
The responsibilities of a company director are substantial. To help manage these obligations, many directors choose to appoint a company secretary to assist with their statutory duties, thereby reducing their workload to a more manageable level.
While a company secretary can handle most of these duties, the legal responsibility for ensuring compliance ultimately remains with the directors.
What is a corporate director?
A corporate director refers to a company, firm, or another corporate entity appointed as the director of a different company. Private companies can appoint as many corporate directors as they wish, either during or after the company formation process, as long as there is always at least one individual serving as a human director.
Appointing corporate directors offers numerous advantages, particularly for newly established companies. The expertise, resources, and reputation of an established corporation can provide essential support and guidance. This association can enhance the credibility and appeal of a lesser-known business to customers, suppliers, investors, and lenders, potentially opening doors for growth and trust in the market.
The role of a corporate director is identical to that of an individual company director, but an authorized person must be appointed to act on behalf of the corporate director. Typically, this responsibility is taken on by a director or secretary of the corporate entity.
However, the Economic Crime and Corporate Transparency Act 2023 introduced new restrictions on appointing corporate directors. Under the new rules, companies can only appoint UK corporate entities with ‘legal personality’ as corporate directors.
Although the implementation date for these changes has not yet been announced, companies will have 12 months to comply once the rules come into effect.
Are directors’ details placed on public record?
Yes, the following details of directors are publicly available on the Companies House register:
Natural Director:
- Title, full forename(s), and surname, including any former name(s)
- Service address (which may be residential or another specified address)
- Nationality
- Month and year of birth
- Occupation
- Appointment date
Corporate Director:
- Date of appointment
- Registered name and number of the corporate director
- Registered office or principal address of the corporate director
- Registration place of the corporate director
- Country of incorporation (for non-UK companies)
- Registration number (for non-UK companies)
- Legal form (for non-UK and non-EEA companies)
- Governing law (for non-UK and non-EEA companies)
This information is freely accessible to anyone on the Companies House register, including businesses and members of the public.
Do you have any other questions?
So, a company director is responsible for overseeing a company’s operations and making key decisions. Directors must act in the company’s best interests, comply with legal requirements, and ensure that financial records and reports are accurate. They also manage the business’s day-to-day affairs, from strategy to compliance with regulations, maintaining fiduciary duties to the company and its shareholders.
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