As a director in the UK, you have legal responsibilities to ensure the company is run appropriately. Every director may have a slightly varied role depending on the company they’re a director of and how involved they are, but there is a set list of responsibilities that all directors must accept before taking on the role:
- Abide by the company’s constitution
- Promote the success of the company
- Provide independent judgement
- Exercise reasonable care, skill and diligence
- Avoid conflicts of interest
- Reject third party benefits
- Highlight interests in a transaction
- Do not misuse company property
- Apply confidentiality about the company’s affairs
- File annual accounts
- File an annual confirmation statement
- Report changes to your company when they happen
- List information about yourself publicly on Companies House
- Keep up to date with UK company law
- Legally responsible for running the company
- Make sure information is sent to Companies House on time, such as:
- Changes to the company’s officers or their personal details
- A change to your company's registered office address
- A change in the allotment of shares
- The registrations of any charges (mortgages)
- Changes to people with significant control (PSCs) or their personal details
UK company director responsibilities in detail
We've explored the list of responsibilities in more detail to help you understand what's required of you if you become a company director. Please note that if there are multiple directors, you will be able to share in some responsibilities, while others are a requirement of all directors. A good example of this is submitting accounts. Accounts only need to be submitted once, so some directors may not need to get involved if other directors accept it as their responsibility.
Abide by the company’s constitution
You are required to abide by the company's constitution and articles of association. These documents are the agreed-upon rules for running the company, signed off by the members, directors, and the company secretary.
The constitution clarifies your authority as a director and outlines the reasons behind these powers.
Promote the success of the company
Your role involves acting with the company's best interests at heart to ensure its success. This means taking into account several key factors:
- The long-term outcomes of your decisions
- The wellbeing and interests of employees
- Maintaining strong relationships with suppliers, customers, and other business partners
- The effects of the company's activities on the community and environment
- Upholding the company's reputation for high standards in business practices
- Ensuring fair treatment of all the company's members
Should the company face insolvency, your duty shifts to prioritising the interests of creditors (those the company owes money to).
Provide independent judgement
It's important that you don't let anyone else influence how you use your authority as a director. While it's fine to take advice, the final decisions should always come from your own independent thinking.
Exercise reasonable care, skill and diligence
You're expected to perform to the highest standard of your ability, and the level of expectation increases with your qualifications and experience. You must leverage all relevant knowledge, skills, or experience you possess. For example, if you’re a qualified accountant, you should lend your expertise to the role.
Avoid conflicts of interest
You need to steer clear of any situations where your loyalties could be split. It's important to think about how your family's positions and interests might create potential conflicts, and if there is a chance of a conflict of interest, you should inform the other directors and members and follow any procedures outlined in the company's articles of association.
This responsibility doesn't end when you stop being a director. You're not allowed to use any property, information, or opportunity you learned about through your role as a director for personal gain.
Reject third-party benefits
You cannot accept any perks from a third party given because of your position as a director as this could lead to a conflict of interest. However, the company might let you accept things like reasonable corporate hospitality, provided it's clear that accepting these benefits won't create a conflict of interest.
Highlight interests in a transaction
You need to inform other directors and members if there's a chance you could personally gain from a transaction the company undertakes. This applies, for example, if the company is considering a contract with a business that a family member of yours owns.
Do not misuse company property
As a director, you're entrusted with the company's assets and must use them solely for the benefit of the company. Misusing company property, whether it's physical assets, intellectual property, or financial resources, undermines the company's integrity and can lead to legal and financial repercussions. Ensure all company resources are used responsibly and in alignment with the company's objectives.
Apply confidentiality about the company’s affairs
As a director, you have access to sensitive information that, if disclosed improperly, could impact the company's reputation, competitiveness, and legal standing. Always safeguard confidential information, only sharing it when necessary and appropriate and in compliance with laws and company policies.
File annual accounts
You are required to prepare and file accurate annual accounts that represent the company's financial health and operations. These accounts must be submitted to the relevant authorities, such as Companies House, by the specified deadlines. Failure to do so can result in penalties and damage to the company's credibility.
File an annual confirmation statement
Directors must ensure that an annual confirmation statement is filed with Companies House. This statement verifies the accuracy of the company's registered information, including directors, registered office, shareholders, and share capital. It's a legal requirement aimed at keeping the public record up to date.
Report changes to your company when they happen
Any significant changes within your company, such as changes in directors, the company address, or share structure, must be promptly reported to Companies House. This responsibility ensures transparency and accuracy in the public register, helping maintain trust with stakeholders and regulatory compliance.
List information about yourself publicly on Companies House
A pivotal aspect of corporate transparency in the UK involves the requirement for companies to list specific information about their directors and operations publicly on Companies House. This includes not just the names of directors but also their month and year of birth, nationality, and occupation. Additionally, the company's registered office address, details of shareholders, and financial statements are made accessible to the public.
Keep up to date with UK company law
It's vital to stay informed about UK company law as it evolves. This knowledge ensures that your actions as a director comply with current legal requirements and governance standards. Regularly educating yourself on legal updates and seeking professional advice when necessary is part of fulfilling your directorial duties.
Legally responsible for running the company
As a director, you hold the legal responsibility for the company's management and operations. This encompasses ensuring the company meets its statutory obligations, acting in the company's best interests, and making decisions that foster the company's success. It's a role that requires integrity, diligence, and a commitment to upholding the highest standards of corporate governance.
Make sure information is sent to Companies House on time
Ensuring the timely submission of information to Companies House is a critical responsibility. This includes promptly reporting:
- Updates to the company’s officers or their details: Any changes in the company’s officers or alterations to their personal details must be communicated without delay. This ensures the public record remains accurate and up-to-date.
- A change to your company's registered office address: If your company's registered office address changes, it's important to report this change promptly to keep official communications smooth and compliant.
- Changes in share allotment: Any new share allotment represents a significant change in the company's structure and must be reported accurately to reflect the current financial and ownership status.
- Registration of charges (Mortgages): If the company takes on new charges, such as mortgages, these need to be registered. This information is vital for transparency and for stakeholders assessing the company's financial health.
- Updates to people with significant control (PSCs) or their details: Changes regarding individuals or entities with significant control over the company, including any changes to their personal details, must be submitted. This transparency is key to understanding the company’s ownership and governance structure.
Liabilities
Directors can be personally liable for losses that a business incurs due to their decisions or failure to act properly. It's important for directors to be aware of the legal frameworks that outline these responsibilities. Specifically, the Company Directors' Disqualification Act 1986 can disqualify an individual from acting as a company director for a period ranging from two to 15 years. The Insolvency Act 1986 introduces the possibility of directors being personally liable for the company's debts. Additionally, directors should consider the implications of the Health and Safety at Work Act 1974 and the Corporate Manslaughter and Corporate Homicide Act 2007, which further define circumstances under which directors could be held accountable.
Other director responsibilities considerations
While not directly listed by GOV.UK as responsibilities, every director should consider the following to ensure their company is responsibly managed:
- Legal and regulatory updates: Directors must stay informed about the latest developments in UK company law and regulatory requirements. This includes monitoring any post-Brexit legislative changes, updates to the Companies Act, and adjustments in reporting obligations to Companies House. Staying informed ensures your company remains compliant and can navigate the legal landscape effectively.
- Digital and cybersecurity responsibilities: Directors must prioritise cybersecurity and data protection. This involves safeguarding customer data, adhering to GDPR regulations, and implementing robust cybersecurity strategies to prevent breaches. A proactive approach to digital security protects your company and builds trust with stakeholders.
- Environmental, social, and governance (ESG) criteria: Businesses are expected to operate sustainably and ethically, and this expectation has never been higher. Directors should lead the way in integrating ESG principles into their company's strategy, focusing on environmental sustainability, social responsibility, and ethical governance. This commitment not only aligns with stakeholder values but also positions your company as a leader in corporate responsibility.
- Crisis management and pandemic preparedness: Directors should ensure their company has a comprehensive crisis management plan covering everything from pandemic response to disaster recovery. This preparation is crucial for maintaining operations under challenging circumstances and safeguarding the company's future.
- Diversity and inclusion: A commitment to diversity and inclusion is not only a moral imperative but also a strategic advantage. Directors should foster an inclusive culture that values diverse perspectives and provides equal opportunities for all. By doing so, you enhance innovation, improve decision-making, and attract a wider talent pool.
- Virtual business address service: Maintaining privacy and professionalism is easier with a virtual business address. This service allows directors to keep their personal addresses off public records while ensuring efficient mail management and compliance with Companies House. It's a simple, effective way to manage your directorial responsibilities without compromising on privacy.
Helping directors with their address needs
Our virtual address and online mail management services help directors maintain their privacy while offering a flexible solution for their business mail. Here’s how it works:
Virtual business address - Our virtual business addresses meet the requirements set by Companies House and can be used as a directors’ service, business trading, registered office and correspondence address. Choose from several locations across the UK, and we’ll assign you an address to use for all of your business’s address needs.
Online mail management - When mail arrives for you or your business, we’ll scan the envelope and upload a copy to your account. Log in to our platform to manage your mail and take further action, such as requesting us to open and scan the contents, forward to another location, or store them for later reference.
