Duties of a Director.
Directors of companies in the UK have a number of legal duties that they must adhere to. These duties are designed to protect the interests of the company and its shareholders and to ensure that directors act in a responsible and ethical manner.
The main directors’ duties in the UK are as follows:
To act within their powers.
Directors must act in accordance with the company’s constitution and the Companies Act 2006. They must not exceed their powers or act in a way that is outside of their authority.
To promote the success of the company.
Directors must act in the best interests of the company and its shareholders. They must take all reasonable steps to ensure the company is successful and profitable.
To exercise independent judgement.
Directors must not allow their decisions to be influenced by other people or by their own personal interests. They must make decisions in the best interests of the company, even if this means going against the wishes of other directors or shareholders.
To exercise reasonable care, skill and diligence.
Directors must act with the same level of care, skill and diligence that a reasonably prudent person would in the same situation. This means that they must keep themselves informed about the company’s affairs and make decisions that are in the best interests of the company.
To avoid conflicts of interest.
Directors must not put their own personal interests ahead of the interests of the company. They must disclose any potential conflicts of interest to the other directors and shareholders.
Not to accept benefits from third parties.
Directors must not accept benefits from third parties in return for favourable treatment from the company. This includes gifts, loans, payments or other forms of reward.
Declare interests in transactions or arrangements.
Directors must declare any interest that they have in a transaction or arrangement with the company. This includes both direct and indirect interests.
These are just some of the main directors’ duties in the UK. Directors who fail to comply with their duties may be held liable to the company or its shareholders. They may also be subject to criminal prosecution.
If you are a director of a company in the UK, it is vital to understand your duties and to take steps to ensure that you comply with them. There are a number of resources available to help directors, including the Companies Act 2006, the guidance issued by the Financial Conduct Authority, and the advice of professional advisors.
For more information on directors’ duties in the UK, you can contact us or find more information on the following websites: