To the uninitiated, being a company director might sound like some sort of glamourous and well paid position. However, there is more to this than meets the eye. There are many obligations and duties to be performed and completed. Here we will look at some of them and hopefully, this will give you an insight into the duties of a company director.
The first thing that needs to be understood is the Companies Act 2006. This is the legislation that sets out the legal framework for forming, operating and regulating companies in the United Kingdom. Every company must have a constitution which includes the Articles of Association, which set out how the company will be operated, governed, and run. This will be registered with Companies House, who are the Government appointed regulatory body that keeps the register of companies in the UK. A company can be private, public or limited liability partnership and directors have a number of legal obligations to fulfil which we will discuss a few of these further in this article.
It might seem obvious that keeping proper and up-to-date records is essential to any business. As a company director, ensuring that the accounts are correct and that they are filed with the Register of Companies at Companies House annually is one of your most important obligations.
You will have a duty to promote the success of the company. This means that decision making must take into account any long-term consequences of any actions. Things to consider here are the reputation of the organisation, how employee’s interests are upheld, relationships with clients, suppliers and other third-party organisations, and any environmental impact. From the beginning of 2019 any company with more than 250 employees will have to report how they have fulfilled this responsibility.
Directors have a duty to be able to exercise their powers in an independent manner, without any undue influence from others. They should be able to make decisions using their own judgment and knowledge. All of which is done in the best interests of the company.
Being aware of conflicts of interest is essential to a company director. They must understand the procedures for dealing with these, as written in the constitution. Any conflict of interest must be declared and acted upon appropriately without damaging the integrity of the organisation.
Retaining confidentiality with regards to the organisation is an important part of being a director. Apart from the public records, which are available to all, any other information is confidential and should not be shared unnecessarily.
There are many more duties to be fulfilled and if you are not carrying out your duties as a company director as laid out in the Companies Act 2006, you are failing the organisation and potentially breaking the law. Ignorance is no defence, and it is up to you to familiarise yourself with the Act and what you need to do. It can be a very rewarding position and the best company directors are those who can see beyond the basics of compliance. They are the ones who strive for the best possible results for their company. For more information on this topic see https://www.ndandp.co.uk/director-disqualification/