If you have been appointed a director of a Company this imposes certain requirements of you, both by virtue of Companies Act 2006 but also more generally in connection with ensuring that the business is able to continue and fulfil its obligations to all of its stakeholders.
What is my role as a director?
The first step is to understand where the role sits within the governance structure of a company. A company is a separate legal entity from its directors and its shareholders.
The directors are in charge of the management of the company’s business; they make the strategic and operational decisions of the company and are responsible for ensuring that the company meets its statutory obligations.
You will hear the term Board of Directors, but many companies have but a single director. No company is able to operate without a director.
The directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day affairs. The basic rule is that the directors should act together but typically may also delegate certain powers to individual directors or to a committee of the board.
You may also be a shareholder or an employee of the company (or both) and, if so, will have additional rights and duties going beyond those purely connected with your office as a director. It is crucial that you draw a distinction between these separate roles, 'wear the right hat for the job' and particularly record your decisions and in what capacity they are being made.
What are the 7 general director duties under the Companies Act 2006?
Keeping a record
As there are substantial financial and criminal offences for failing to fulfil your directors duties it is often most important that you keep a record to prove you have considered and fulfilled these legal duties. These records should be kept for 10 years and they will be something that you may well have cause to be grateful for.
Legislation legal duties associated with being a director
Companies House Guide: Being a company director
Directors implications of breaches (to link to another article for our website)