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Do you know your duties as a company director?

Company director duties

Running your business as a Limited Company is a common practice in the UK – but as a company director do you know what your duties are?

A Limited Company has shareholders who own the company, and a board of directors who are appointed by the shareholders.  For small businesses, these can often be the same people.  The directors are in charge of setting strategic objectives and managing the operational running of the business.  They are also responsible for ensuring that the company meets its statutory obligations.

Directors must:

  • run the company in line with the articles of association.  A lot of companies are set up with standard articles of association provided by Companies House as a template.  Directors should make sure they know what is in the articles of association for their company.
  • run the company in a way that it is likely to be successful.  Directors must exercise care and skill in the running of the company, and must make decisions in the best interests of the company.  They must avoid conflicts of interest and must tell the shareholders if they have any personal interests in any of the company’s transactions.
  • maintain accurate accounting and company records.  Records must be kept for 6 years plus the current year and must be up to date.  Details must include all money spent and received, invoices issued, assets owned by the company, debts owed to the company, stock bought, sold and held as well as calculations for all taxes that must be paid.
  • deliver a confirmation statement and a set of annual accounts to Companies House each year.  As part of the confirmation statement, there must also be a register of ‘persons with significant control’.
  • register the company for the appropriate taxes and deliver tax returns as required.  This includes VAT, PAYE and Corporation Tax.
  • report company activities to shareholders.  This can be done via a formal mechanism such as an AGM.  The directors should be aware of how often and in what format this reporting is required.

 

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