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What Are the Responsibilities of a Company Director?

  • Writer: Jerelyn Aglibao
    Jerelyn Aglibao
  • Dec 5
  • 3 min read
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Being a company director in the UK comes with prestige but also real legal responsibilities. Many new business owners don’t realise that becoming a director is more than just “running the business.” You’re legally responsible for protecting the company, its finances, and the people connected to it.


In this article, we break down your duties in clear, simple language—so you understand exactly what’s expected of you and how to stay compliant.


1. Follow the Company’s Constitution (Articles of Association)

Your company’s Articles of Association set out how the business should be run. Directors must follow these rules and act within the powers given to them.


In simple terms, you can’t make decisions that go against what the Articles say. If you do, the company could challenge the decision or you could be held personally liable.


2. Promote the Success of the Company

This is one of the most important duties under the Companies Act 2006.

You must always make decisions that benefit the company as a whole not just yourself or certain shareholders.


This includes considering:

  • Long-term consequences of decisions

  • Employees’ interests

  • Relationships with customers, suppliers, and the community

  • Environmental impact

  • Fairness between shareholders


Think big picture. Every decision should move the business forward responsibly.


3. Exercise Independent Judgment

You’re expected to make your own decisions as a director—not simply follow someone else’s instructions.


This doesn’t mean you can’t take advice from accountants, lawyers, or other directors—but the final call must be yours.


4. Act With Reasonable Skill, Care and Diligence

You are legally required to:

  • Understand what’s going on in the company

  • Ask questions

  • Monitor performance

  • Spot problems early

  • Seek professional advice when needed


Even if you’re not an expert, you’re expected to behave as a “reasonably diligent person” would. Ignorance is not an excuse.


5. Avoid Conflicts of Interest

Directors must avoid situations where personal interests clash with the company’s interests.


Examples include:

  • Taking business opportunities for yourself

  • Using company information for personal gain

  • Being involved in competing businesses

  • Awarding contracts to friends or family without proper process


If a conflict exists, it must be declared immediately.


6. Not Accept Benefits From Third Parties

Directors must not accept gifts, benefits, or incentives that could influence a decision. This protects you and the company from accusations of bribery or corruption.


7. Declare Interests in Transactions

If you stand to benefit from a transaction or contract involving the company, you must disclose it to the board.


Transparency is key.


8. Keep Accounting Records and File Reports on Time

Directors are legally responsible for ensuring the company keeps proper financial records and submits filings on time, including:

  • Annual accounts

  • Confirmation statement

  • Corporation Tax return

  • VAT returns (if registered)

  • PAYE submissions (if employing staff)


Late filings = fines, penalties, and increased HMRC scrutiny. Even if you use an accountant, the responsibility still lies with the director.


9. Pay the Company’s Taxes Correctly

Directors must ensure that:

  • Corporation Tax is calculated correctly

  • VAT is paid when due

  • PAYE/NICs are submitted accurately

  • R&D claims, expenses, and deductions are legitimate


Failure to do this can result in personal liability.


10. Protect the Company When Facing Financial Difficulty

If the company is struggling, directors must act carefully to avoid wrongful trading.

This means you cannot continue operating if you know the company cannot pay its debts.


Your duties shift toward protecting creditors not shareholders. Get advice early. It can make the difference between recovery and liquidation.


11. Maintain Statutory Registers

The company must maintain accurate internal registers, such as:

  • Directors

  • Shareholders

  • Persons with significant control (PSC)

  • Charges/mortgages on the company


These must be kept up to date.


Why These Responsibilities Matter

Being a director isn’t just a title, it’s a legal position with serious accountability. But the good news? When done right, these responsibilities:

  • Protect your company

  • Build trust with investors and clients

  • Improve financial performance

  • Reduce legal and tax risks


Understanding your role is the first step to running a strong, compliant business.

 
 
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