So you are a director of a company, but are you aware of your legal obligations?

Commercial solicitor, Nick Arthur, advises businesses throughout Devon and Somerset.

Barnstaple business solicitor, Nick Arthur, looks at the legal obligations of company directors.

Company directors are often surprisingly uncertain about their duties and obligations. They are frequently that they effectively act as agents of the company, being appointed by the shareholders to manage the company’s affairs on a day-to-day basis.
As a general principle, the directors of a company should act together as a board. The board can however delegate powers to individual directors or to a committee.

It is important for a director to understand their legal responsibilities in order to avoid becoming personally liable.
Under the Companies Act 2006, the following are some of the duties and obligations you need to be aware of as a director to avoid incurring personal liability or even a criminal fine:-

  • You must act in good faith to promote the success of the Company. This includes both short term and long term consequences of the decisions you may make and the effect on employees and shareholders of the Company.  Consider the impact to the community and environment.

 

  • You must, in carrying out your duties and in making decisions, do so with reasonable care, skill and diligence to the best of your ability.

 

  • If the Company becomes insolvent your duties are to the creditors not the Company.

 

  • The Company will have Articles of Association which detail the Directors’ powers and the purpose for them. You need to be aware of them and observe those articles.

 

  • If you have a personal interest in a contract which the Company enters into you must declare that interest.

 

  • You should avoid any situation where you cannot act impartially.

 

  • You should not accept any benefits from third parties

For legal guidance on company and commercial issues contact Barnstaple business solicitor Nick Arthur at our offices in Barnstaple, North Devon on 0333 888 0404 or email him direct at [email protected]

Nick Arthur

Nick Arthur

Nick Arthur is the hugely experienced head of Slee Blackwell's commercial department. His expertise includes dealing with company share acquisitions and disposals, partnerships and site assembly. Nick has been involved in multi-million pound deals in both the corporate and the property sector.
Nick Arthur

Nick Arthur

Nick Arthur is the hugely experienced head of Slee Blackwell's commercial department. His expertise includes dealing with company share acquisitions and disposals, partnerships and site assembly. Nick has been involved in multi-million pound deals in both the corporate and the property sector.

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Call the Slee Blackwell helpline on 0333 888 0404