Company Directors Responsibilities in a Private Company
A private limited company must have a least one director. A company director is appointed by the business owner or owners or its shareholders to ensure the business is run properly. Unlike a public company, private companies are not required to appoint a company secretary, hold Annual General Meetings, or present accounts to company members in a general meeting. In addition to responsibilities laid out in a company's constitution, company directors are also guided by legal requirements established in UK company law.
About Private Company Directors
Private companies range from small family operations to large corporations. A private company does not trade securities to the general public, such as selling stocks or shares on the market or a stock exchange. A private company must appoint at least one director to oversee the business. At least one company director must be an individual.
To qualify as a company director, a person must be at least 16 years of age and not be considered a discharged bankrupt. They must also not be disqualified from serving as a company director by the courts or Companies House. Companies House maintains a registry of all disqualified directors in the UK.
Company Director Role
A company director is selected to oversee the activities of the company. Their main role is to ensure that the company is run properly. A director may be tasked with establishing general policies and objectives for the company. They may also be asked to establish remuneration policies for senior management, appoint and review senior managers, and ensure the business has sufficient financial resources to operate.
In smaller private companies, a director may also be the sole shareholder or owner. They may also serve in other capacities, such as the company secretary or chief executive. Multiple directors typically form part of a board, which may be known as a board of directors, governors, managers, trustees, regents or visitors. The powers, roles and responsibilities of a director or a board are outlined in a company's constitution, such as the articles of association.
Company directors are required to register with Companies House. They must also keep company records, including financial and accounting records, and report changes to Companies House and HM Revenue and Customs. For example, changes to the company's registered office address, archives and records location, and director and company secretary details must be reported within 14 days. A self-assessment and a personal self-assessment tax return must also be completed by each company director every year.
Company Director Responsibilities
In addition to a company's constitution, responsibilities of company directors are also guided by company law and common law. They have been largely codified within the Companies Act, 2006. A company director is legally required to act only within their powers. They must exercise independent judgement and reasonable care using their own skill, experience and knowledge. Their decisions and actions must also respect decisions made by the company's owners or shareholders.
One of the main responsibilities of a company director is to promote the success of the business. Their decisions should benefit the company and its owners or shareholders. Decisions must also consider broader and the longer term consequences. As a result, directors must consider the broader interests such as those of the company's employees and its relationships with customers and other stakeholders such as suppliers. Directors must also make decisions that are fair. They must also consider the impact of their decisions on the community and the environment, and how their decisions affect the reputation of the company.
A company direct should make decisions for the benefit of the company. As a result, a company director must avoid conflicts of interest. Conflicts include decisions and dealings that would bring personal benefit. Authorisation to breach a conflict of interest may be given by a private company's board of directors or shareholders. Unlike a public company where this authority must be provided in the company's constitution, a private company is permitted to provide authorisation irrespective of whether there is explicit authority in the constitution. Similarly, a company director cannot accept benefits from a third party and must disclose any interest or role in a proposed company transaction.