What Directors need to know about their duties and responsibilities
Directors of companies are subject to various and numerous legal duties. Breaching any of these can lead to disqualification and fines. To help directors understand the laws, our Corporate and Commercial Law team summarise the main duties and responsibilities Directors must know about in order to comply.
Being a Director of a business or organisation carries with it not only responsibilities to ensure success and longevity for the business, and a happy, engaged workforce, but also a general duty to promote the success of the company for the benefit of its people, stakeholders and customers.
Whilst doing all of this, Directors are also required by law to take into account a number of factors, duties and responsibilities.
What are a Directors’ main duties?
In general terms, Directors are responsible for ensuring the Company’s compliance with the law, for example, when declaring or paying dividends and ensuring the health and safety of employees and/or of the Company’s products or services.
Every Director has a duty to declare interests and avoid conflicts of interests. There are also directors’ duties relating to property, opportunities and information of and about the Company.
The duties arise under statute, in particular the Companies Act 2006, and with common law. Together, these may be affected by the company’s articles of association.
In the case of a company in financial difficulty, very important duties also apply under the Insolvency Act 1986.
Directors are responsible to the shareholders of the Company and sometimes may need to obtain shareholder approval for proposed actions recommended or planned for the business.
What are the consequences of breaching Directors’ duties?
The consequences of breaching directors’ duties or responsibilities can be very serious including personal and criminal liability, disqualification, and/or fines.
Where can Directors get advice about their duties?
Our corporate solicitors have extensive experience of advising directors on their duties and responsibilities, as well as on the processes and documentation required to ensure and demonstrate compliance.
Help and advice
If you need help or legal advice in connection with understanding and complying with your duties and responsibilities as a company director, contact our corporate solicitors: Company and Commercial Solicitors | Sydney Mitchell Solicitors
Disclaimer:
Information on this website is provided for general information purposes only. It is not intended to constitute and should not be relied upon as legal advice. There are a number of factors and circumstances which may be relevant to legal advice. The law may also have changed before we are able to update the information on this website.
