Director's Duties

Tuesday 20th July 2021

Directors have several statutory duties and these apply whether you are a director registered as appointed at Companies House either as an executive director or non-executive director and if you are a “de facto director” which means that you act as director even if you are not registered as appointed as one at Companies House – sometimes they are known as “shadow directors”.

The duties are:

● To act within powers.

● To promote the success of the company.

● To exercise independent judgment.

● To exercise reasonable care, skill and diligence.

● To avoid conflicts of interest.

● Not to accept benefits from third parties.

● To declare an interest in a proposed transaction or arrangement

The duties are owed to the company and it is only the company that can enforce them. Shareholders can make a company hold directors to account who have not complied with their duties.

Failure to comply with the duties could allow a company to seek an injunction, set aside a transaction, or claim damages.