United Kingdom Director Duties and Responsibilities

UK Director Duties and Responsibilities Learn more about UK director duties and responsibilities with this pocket guide from 3E Accounting.

Companies in the United Kingdom are required to have at least one director to manage the company’s business. The Companies Act 2006 and Corporate Governance Code provide for general UK director duties and responsibilities. In the UK, directors have both a statutory and a fiduciary obligation to carry out their duties bona fide.


Officers of a Company

In the UK, a person can be qualified to be a director if:

  • They are above 16 years of age.
  • They are not disqualified from being a director.

As part of the company registration process, directors’ names and relevant personal information are recorded in Companies House’s public registry.

As long as the company has a UK registered address, the directors are not required to live in the UK. Company secretaries can also act as directors of a company, provided they are not an undischarged bankrupt or the company’s auditor.

Directors duties and responsibilities are viewed seriously, and any breaches can result in prosecution, disqualification, or hefty fines. It is considered a good business practice for companies to take out directors’ and officers’ (D&O) insurance. This provides indemnity for the company against liability arising from negligence.


Duties & Responsibilities

The directors of a limited company are responsible for running the company, making policy and operational decisions as well as managing its finances. The company may hire other professionals to do these jobs, but ultimately the directors of the company are still liable. They are legally responsible for the business as their decisions are considered binding upon the company. Directors are viewed as agents of the company hired by its shareholders to manage the business.

A director’s responsibilities are contractual, statutory as well as fiduciary. They are required to abide by the terms and conditions as listed in the company’s constitution, specifically the Articles of Association. Directors must exercise their powers for their purpose and in good faith.

Directors also need to file annual returns, pay Corporation Tax, and ensure accurate company records are maintained. They must carry out their duties to benefit the company as a whole and are statutorily required to act in good faith. This includes having regard to employees’ interests as well as long term impacts on the company, community, and shareholders, amongst others. In carrying out their duties, the standard of reasonable care, skill and diligence exercised is measured both objectively and subjectively.

Any conflict of interest or personal benefit accruing from their position as a director must be declared to the shareholders. A situation of conflict usually arises when a director holds numerous positions in one or more companies. This includes acting in an advisory role to or sitting on the board of a company’s competitor, supplier, or customer. Personal benefits can come about when a director capitalises on company information and make a profit from it.

Directors also have a duty of confidentiality towards the company and must ensure that the company adheres to all regulations as required by law. To learn more about UK director duties and responsibilities, Contact 3E Accounting today. Our consultants will be able to guide you to ensure full compliance with rules and regulations. 3E Accounting offers customisable business solutions for your every business need. Call us today to work with the best global professionals in the market.

UK Director Duties and Responsibilities