The duties of UK company directors have previously evolved through statute and subsequent case law. The Companies Act 2006 embraces case law and requires directors follow courses of action that should be in the best interests of the UK company. This should ultimately lead to the development and success of the company. Directors must not act in such a way that there is a conflict of interest between the good of the company and their personal self-interests or wishes.
Who can become a UK director?
All limited companies must appoint a minimum of one director, although most have at least two. We recommend two, as the one director can never resign – a company cannot operate without a director.
A director cannot be someone:
- barred from the role by a court
- who is an undischarged bankrupt
- or who is under 16 years of age.
The director must conform to the articles of association that govern the management of a company. These set out what a director may or may not do and how the company can be operated.
Directors duties in the UK
These must be taken in good faith and with the interests of the company at the heart of the management of the company.
A director must:
- deal with all shareholders fairly and equally
- stand above conflicts of interest and be open and honest about any conflicts of interest
- refuse any personal profits made at the cost of the company.
UK Employment law
A director holds a duty to observe the company complies with all aspects of employment law under UK law. If they don’t, they could be liable in cases of unfair dismissal, racial, religious or sexual discrimination or further working practices that treat employees unfairly.
Taxes and accounts
Company directors must check that PAYE taxes, VAT and National Insurance are paid at the correct time and in the correct amounts.
A director is responsible for preparing a company’s profit and loss account and a balance sheet. They must also make sure that the company keeps proper accounting records and must take reasonable and proper steps to ensure that the accounts are true and fair. Additionally, a director has a duty to provide auditors with all the information and explanations they may request.
By not filing tax returns or paying taxes, not submitting the appropriate returns to Companies House, not compiling and filing accounts, not maintaining the required company records and running an insolvent company can all result in a director’s disqualification.
Professional advice should be sought in those situations where the issues do not fall within the knowledge or experience of the directors. Please ask if in doubt.
- Written by: admin
- Posted on: August 13, 2015
- Tags: UK Director, UK Law