Directors' responsibilities

The seven statutory duties every company director owes. They apply from day one.

What it means

The Companies Act 2006 sets out general duties: to act within powers, to promote the success of the company, to exercise independent judgement, to exercise reasonable care skill and diligence, to avoid conflicts of interest, not to accept benefits from third parties, and to declare interests in proposed transactions.

Why it matters

They are owed to the company, and breach can mean personal liability. Once a company is in financial difficulty, the duty to promote success is displaced by a duty to consider creditors' interests.

What it looks like in practice

They apply to every director equally — including a spouse appointed for tax reasons who takes no part in the business, and a de facto director who acts as one without being appointed.

What to watch out for

Appointing somebody as a director without explaining what it means. And conflicts of interest not declared and minuted, which is the easiest of the seven to breach accidentally.

Where to get proper advice

Companies House's guidance for directors, and the Institute of Directors. A solicitor if the company is in difficulty.