Responsibilities and obligations of a director of a limited company

If you have established a business through a limited company, you will have a number of duties – in addition to legal and financial responsibilities – as a director of the company.

This article discusses who is eligible to be appointed as a director and what your responsibilities will be if you are appointed.

Who is eligible to serve as a company director?

All private companies are required to have at least one director – but are there any legal restrictions on who may fill this position?

The UK is an excellent place to start a business because the process is relatively straightforward and Companies house imposes fewer restrictions on private companies than many of its European and international counterparts.

A person may be appointed as a limited company director if they meet the following criteria: 1. They have not been disqualified as a company director.

1. They are at least sixteen years old.
2. They are not permitted to declare bankruptcy.

In exceptional circumstances, a court may permit someone who fails to comply with (1) or (3) to act as a company director for a specific company.

While all private limited companies must have at least one director, they are no longer required to employ a company secretary unless they so desire. However, you may find that this optional appointment is beneficial in the future if you are required to provide two signatures on paperwork from company officials.

Directors and company secretaries of private limited companies are not required to hold any specific qualifications.

Limited company directors' responsibilities

The Companies Act 2006 establishes seven general statutory duties for company directors.

• Obligation to act within the scope of your authority as a company director
• It is your responsibility to ensure your business's success.
• Independent judgment is required.
• Obligation to exercise reasonable care, diligence, and skill
• Obligation to abstain from conflicts of interest
• Obligation to refrain from accepting benefits from third parties
• Obligation to disclose potential conflicts of interest in a proposed transaction or arrangement with the company

Financial obligations

As a director of a business, you have a number of accounting-related responsibilities. While you should hire a small business accountants in London to handle all (or the majority) of these tasks, you are ultimately responsible for ensuring that they are completed:

Maintain accurate accounting records that enable the preparation of accounts that are a true and fair representation of the company's financial position.

You must submit accurate company accounts to Companies House on time.

You must file a corporation tax return with HMRC (Form CT600) and pay any tax liabilities that arise.

You must ensure that employees (and yourself) are paid correctly – including the deduction of income tax and national insurance contributions, as applicable.

You must conduct business in a solvent manner, ensuring that you can meet your business's financial obligations.

Directors' legal responsibilities

Each year, you are responsible for completing and submitting a Confirmation Statement. In July 2016, the Confirmation Statement supplanted the previous Annual Return (Form AR01).

To establish and maintain a register of Persons with Significant Control (affectionately referred to as a "PSC register"). Annually, the PSC Register must be filed with Companies House as part of the Confirmation Statement.

To submit forms to Companies House notifying them of any changes to the director(s) or secretary(s) of the company.

Notify Companies House if your registered company's address changes.

You must always act in the company's shareholders' best interests. This means that directors cannot enrich themselves at the expense of the business.