If you are a limited company director, you have a number of duties as well as legal and financial responsibilities you should be aware of.
These responsibilities apply whether you are the sole director or one of several on a board.
This article explains who can be appointed as a director and outlines the duties associated with the role.
Who can be appointed as a company director?
All private companies must have at least one company director, but are there any legal restrictions on who can fill this position?
The UK is a good place to set up a business – the process is relatively straightforward, and Companies House imposes fewer restrictions on private companies than many of its European and international counterparts.
In fact, you can become a director two years before you’re legally allowed to buy a pint in a pub!
A person can be appointed to the position of limited company director as long as:
- They have not been disqualified as a company director.
- They are over the age of 16.
- They cannot be bankrupt.
- They are not subject to any court order that prohibits them from acting as a director.
In rare cases, a Court may allow someone who fails to meet either condition 1 or 3 to act as a company director for a specific company.
All private limited companies must have at least one director; however, they are not required to appoint a company secretary unless they choose to do so.
However, you may find that this optional appointment is helpful in the future, as occasionally you may be required to provide two signatures from company officials on paperwork.
No specific qualifications are required for the directors or company secretaries of private limited companies.
Duties of limited company directors
The Companies Act 2006 outlines the statutory duties of company directors as seven general duties.
- Duty to act within your powers as a company director
- Duty to promote the success of your company
- Duty to exercise independent judgement
- Duty to exercise reasonable care, skill and diligence
- Duty to avoid conflicts of interest
- Duty not to accept benefits from third parties
- Duty to declare interest in proposed transaction or arrangement with the company
- Duty to maintain transparency and accountability in decision-making processes
Financial responsibilities
As a company director, you have several accounting-related obligations.
Although you should employ a small business accountant to perform all (or most) of these tasks, you are ultimately responsible for making sure that all tasks are carried out:
- Maintain accurate accounting records that enable the preparation of accounts, providing a true and fair representation of the company’s financial position.
- You must submit accurate company accounts and file them on time with Companies House.
- You must submit your corporation tax return (Form CT600) to HMRC and pay any tax liabilities due.
- You must deal with the correct payment of staff (and yourself) – including the deduction of income tax and national insurance contributions, where they apply.
- You must trade prudently, ensuring that you can meet the financial liabilities of your business.
- You must register for VAT if your company exceeds the VAT threshold and submit regular VAT returns if applicable.
Legal responsibilities of company directors
- You are responsible for completing and filing a Confirmation Statement every year.
- To produce and maintain a register of Persons with Significant Control (also known as a “PSC register”). The PSC Register must be filed, as part of the Confirmation Statement, with Companies House annually.
- To submit forms to Companies House to notify of any changes in the particulars of the company director(s) or the company secretary.
- Notify Companies House if you change your registered company address.
- You must always act in the interests of the company shareholders. This means that the directors cannot enrich themselves in a way that damages the company.
- You must ensure that the company complies with applicable health and safety, employment, and data protection laws.
- You should maintain minutes of board meetings and formal decisions as part of corporate governance.
Take a look at this official guide, which outlines the responsibilities of limited company directors.