If you have set up in business via a limited company, there are a number of duties you will have – as well as legal and financial responsibilities – if you are a director of the company.
This article explains who can be appointed as a director, and what your duties will be if you are appointed to 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 simple, and Companies House imposes fewer restrictions on private companies than many of its counterparts in Europe and beyond. 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:
1. They have not been disqualified as a company director.
2. They are over the age of 16.
3. They cannot be bankrupt.
In rare cases, a Court may allow someone who fails 1) or 3) to act as a company director to a specific company.
All private limited companies must have at least one director, but they no longer need to appoint a company secretary unless they want to. However, you may find that this optional appointment is useful 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
You can read more about these duties, in much greater detail, in our article – Companies Act 2006 and Directors’ Duties.
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 to ensure that all tasks are carried out:
- Keep good accounting records from which accounts can be prepared which give a true and fair representation of the financial position of the company.
- 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 solvently, ensuring that you are able to meet the financial liabilities of your business.
Legal responsibilities of company directors
- You are responsible for completing and filing a Confirmation Statement every year. The Confirmation Statement replaced the old Annual Return (Form AR01) in July, 2016.
- 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 company director(s) or 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.