Limited Company Directors
With regard to limited companies, the shareholders are deemed to be the actual owners of the company but the management is the responsibility of the company directors. The Companies Act 2006 places a number of requirements and responsibilities on the directors to ensure that they act in the best interests of the company.
The requirements with regard to company directors will vary depending on the type of company set up. A private limited company is required to have at least 1 company director, whereas a public limited company must have 2. The Companies Act 2006 made some changes to the law which mean that company directors must now be at least 16 years of age. Previously children were being appointed as company directors for underhand purposes or to act as shadow directors. This was found to be not in the best interests of the company.
The articles of association will lay down the duties and responsibilities of the company directors and how the company should be run. Including how long the company director is appointed for and how long they are permitted to serve the company. The articles of association may also limit what the directors can do, in order to protect the company.
In their role, company directors are seen as employees of the company and as such are expected to register under the Pay As You Earn scheme. As part of their role company directors are also expected to ensure that the necessary information is sent to Companies House. This includes the annual company accounts, among other things and failure to ensure this happens can result in hefty fines for the company.
Company Director – Responsibilities
As already mentioned, company directors have a number of responsibilities placed on them by The Companies Act 2006. These include acting within the law, acting in good faith, exercising care and avoiding any conflicts of interest that might harm the company.
Company directors, in their role as the managers of the company are also under a duty to ensure that the company is:
- VAT Registered where appropriate;
- Is making the necessary NI and tax deductions on behalf of employees (i.e. has a payroll system in place;
- Acting fairly with regard to the treatment and management of company employees;
- Keeping proper accounts.
In some circumstances where a company director fails to carry out their duties or abuses their position/power, they may be subject to criminal charges on a personal level.
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