Being a company director is not just a title — it comes with serious legal obligations. The Companies Act 2006 sets out seven statutory duties that every director must follow. Breach them and you can face personal liability, fines or even disqualification.
The Seven Statutory Duties
- Act within powers — only exercise powers for the purposes they were given. Follow the company articles.
- Promote the success of the company — act in the way most likely to benefit the company as a whole.
- Exercise independent judgment — do not blindly follow instructions from others.
- Exercise reasonable care, skill and diligence — the standard expected of a reasonably diligent person with your knowledge.
- Avoid conflicts of interest — do not put personal interests above the company.
- Not accept benefits from third parties — do not accept gifts that could influence decisions.
- Declare interest in proposed transactions — disclose personal interests to other directors.
Filing Obligations
Directors are personally responsible for ensuring the company meets its filing deadlines:
- Annual accounts — within 9 months of year end. See our accounts guide. Late penalties start at £150.
- Confirmation statement — filed annually. Read our confirmation statement guide.
- Corporation Tax return — due 12 months after accounting period end.
- Notify Companies House of changes to directors, address, shares or PSC details within 14 days.
Personal Liability Risks
- Wrongful trading — continuing to trade when the company has no reasonable prospect of avoiding insolvency.
- Fraudulent trading — carrying on business with intent to defraud creditors.
- Personal guarantees — if you have guaranteed company debts (common with bank loans).
- HMRC penalties — directors can be personally liable for unpaid PAYE, NICs and VAT.
Director Disqualification
The Insolvency Service can disqualify directors who act unfit. Periods range from 2 to 15 years. During disqualification you cannot be a director of any UK company. Common reasons include repeated failure to file accounts, fraudulent trading and asset stripping before insolvency.
Protecting Yourself
- Keep thorough board minutes of all major decisions
- Take professional advice when facing financial difficulty
- Consider directors and officers (D&O) insurance
- File accounts and returns on time — use CalcPad to track deadlines
- Declare any conflicts of interest immediately