What is a director?

Being a director: Key Responsibilities and Liabilities for Company Directors

A company director has significant responsibilities for leading and managing a company. This factsheet provides an overview of the key duties, powers, and potential liabilities. The board of directors is responsible for defining the company’s long-term goals and strategic direction, ensuring adherence to its strategic plan and making necessary adjustments, selecting and overseeing executives responsible for daily operations, and providing shareholders and relevant stakeholders with updates on the company’s performance and activities.

Directors’ Powers and Responsibilities

Individually, directors manage the company and exercise its powers as outlined by the Companies Act 2006 and the company’s articles of association.

Statutory Responsibilities and Liabilities

Directors must ensure the company complies with all statutory obligations, particularly if there is no company secretary, and are responsible for maintaining accurate financial records and preparing annual accounts, which must be presented to shareholders and filed with the Registrar of Companies.

Directors can be held personally liable for breaching their fiduciary duties by failing to act in the company’s best interests, and for wrongful trading if they continue to trade while the company is insolvent.

Directors face several legal protections. Directors’ liability insurance provides protection against personal claims for actions taken in their role. Under the Company Directors’ Disqualification Act 1986, directors can be banned from holding office for 2 to 15 years. The Insolvency Act 1986 imposes personal liability for company debts in cases of fraudulent or wrongful trading.

Regarding Section 182, directors must declare any direct or indirect interest in any existing company transaction or arrangement. Declarations are required only for interests likely to create a conflict of interest and must be made to the board. No declaration is needed if the directors already knew or should reasonably have known about the interest, or for interests related to service contracts or remuneration discussed by the board or a relevant committee. If the interest was previously declared and has not changed, no further declaration is necessary. This requirement applies even if the director is not a party to the transaction or arrangement.