Limited Companies – Directors’ Duties and Responsibilities
A Limited Company is an excellent vehicle for many businesses. You may already operate as a Limited Company, or be considering to set up a Limited Company.
If you are a Director of a limited company, you are subject to a number of requirements. For example, you must:
- Try to make the company a success, using your skills, experience and judgment;
- Follow the company’s rules, contained in its Articles of Association;
- Make decisions for the benefit of the company, not yourself;
- Inform other shareholders if you may personally benefit from a transaction the company is involved in;
- Keep and maintain company records. Report any changes to Companies House and HMRC;
- Ensure that the company accounts are a “true and fair view” of the business’ finances;
- Register for Self Assessment and send a personal Self Assessment tax return every year (if you are receiving an income from the company).
A breach of duties may result in a director being disqualified from acting as a director. Some breaches may result in the director incurring personal liability.
Here are our top tips to help you fulfill your role as a company director:
1) Review the content of your company Articles of Association. The company Articles of Association define the rules governing how the company is to be run, including what the directors’ powers and responsibilities are. The Articles of Association set out how decisions are to be made: for example, the procedures for calling a board meeting and how many directors need to vote on any proposal.
2) Report changes in the company to Companies House. Filings need to be made with the Registrar of Companies (usually within 14 days) if:
- The company changes its Registered Office;
- The company appoints or removes a director;
- An existing director or company secretary changes their contact details;
- The company allots new shares;
- The company changes its name;
- The company has a registered charge against it;
- The company satisfies a registered charge.
3) Take Action. If you have any concerns regarding your role as a director, or would like assistance in keeping your company records and Companies House fully informed of changes, please call Bennett Griffin LLP on 01903 229999 and speak to one of our Company Commercial team.
The information contained in this article is for general guidance only and is not intended to be legal advice. Professional advice should always be taken on the application of the law in any particular situation