Limited company director duties and responsibilities
When you become a director of a limited company, you are entrusted with several responsibilities and duties, to ensure that you run the company properly, and comply with company law and a wide range of rules and regulations which cover everything from paying your tax on time, to how you treat any employees.
Companies House responsibilities
To become a company director, you must be over 16, not be disqualified from being appointed as a director, or be an undischarged bankrupt. There are no other restrictions. In fact, you don’t even need to be an employee or shareholder of the company to become one of its directors.
The directors of each limited company must fulfil the following duties:
· Complete the Confirmation Statement (CS01) form, which provides Companies House with a snapshot of the standing data of the company at the time of filing.
· Provide a company of the company’s annual accounts.
· Notify of any changes to the company’s personnel (names, addresses, appointments or resignations), or the company’s registered address. Many of these tasks can be performed online, via WebFiling.
· Inform Companies House of any registration of charges (the security the company provides for a loan – such as a mortgage), or allotment of shares.
General duties of directors
These key duties are contained in the Companies Act 2006
· 1. A duty to act within their powers, and must act in accordance with the company’s constitution.
· 2. A duty to promote the success of the company (including considering the interests of the company’s employees, the community and environment, the company’s reputation, and the company’s members).
· 3. A duty to exercise independent judgment.
· 4. A duty to exercise reasonable care, skill and diligence, to a degree expected of someone with the knowledge, skills and experience of a given director.
· 5. A duty to avoid conflicts of interest.
· 6. A duty not to accept benefits from third parties – to avoid potential conflicts of interest, and accusations of bribery, for example.
· 7. A duty to declare interest in proposed transaction or arrangement – again, to minimise any potential conflicts of interest.
The company’s directors are responsible for ensuring that the company’s accounts are accurate and that these accounts and any outstanding tax are submitted on time. Although your accountant will most likely undertake the preparation work, and submit the relevant forms, the directors are ultimately responsible in the eyes of the law.
Alongside the statutory and financial duties of a company director, some of the other responsibilities include:
· Complying with current law regarding the hiring and treatment of employees.
· Ensuring that the company complies with Health and Safety regulations.
· Ensuring that the company is adequately insured. Some types of insurance cover may be mandatory.