Director Duties
Director Duties
The 7 Duties of a Company Director Explained
What are the legal duties of a company director? Understand the seven statutory director duties under the Companies Act 2006, your practical responsibilities and what directors need to know in 2026.
A UK company director has statutory duties as well as
ongoing Companies House, accounting and tax responsibilities.
Director Duties: What Are the Duties of a Company Director?
In simple terms: a UK company director is legally responsible for helping to run the company properly, making decisions in the company's interests and meeting the duties imposed by company law.
The Companies Act 2006 sets out seven general director duties: act within your powers; promote the success of the company; exercise independent judgement; exercise reasonable care, skill and diligence; avoid conflicts of interest; not accept improper benefits from third parties; and declare interests in proposed company transactions.
Directors also have practical responsibilities including maintaining adequate company and accounting records, approving annual accounts, ensuring required information is filed with Companies House and overseeing the company's tax affairs.
These responsibilities apply to directors of businesses of all sizes, including directors of small owner-managed limited companies. Appointing an accountant can make compliance much easier, but it does not remove a director's underlying legal responsibilities.
The 7 Legal Duties of a Company Director
Sections 171 to 177 of the Companies Act 2006 set out seven general duties owed by a director to the company. They govern how directors use their powers, make decisions and deal with potential conflicts.
| Section | Director duty | What it means in practice |
|---|---|---|
| 171 | Act within your powers | Follow the company's constitution and use your powers for their proper purpose. |
| 172 | Promote the success of the company | Act in good faith in the way you consider most likely to promote the company's success for its members as a whole. |
| 173 | Exercise independent judgement | Make your own properly considered decisions rather than simply following somebody else's instructions. |
| 174 | Exercise reasonable care, skill and diligence | Apply the standard reasonably expected of a director together with your own knowledge, skill and experience. |
| 175 | Avoid conflicts of interest | Avoid situations where your personal or other interests conflict, or may conflict, with those of the company. |
| 176 | Do not accept benefits from third parties | Do not accept benefits given because you are a director where they could create a conflict. |
| 177 | Declare interests in proposed transactions | Tell the other directors about relevant direct or indirect interests before the company enters into the transaction. |
Act Within Your Powers
A director must act in accordance with the company's constitution and exercise their powers only for the purposes for which those powers were given.
For most private companies, the articles of association are a particularly important part of the constitution.
Promote the Success of the Company
A director must act in the way they consider, in good faith, would be most likely to promote the company's success for the benefit of its members as a whole.
Among other matters, directors should have regard to:
- the likely long-term consequences of decisions;
- the interests of employees;
- relationships with suppliers, customers and others;
- the impact on the community and environment;
- the company's reputation for high standards of business conduct; and
- the need to act fairly between members.
Exercise Independent Judgement
Directors are expected to exercise their own judgement. You can obtain professional advice, but you should properly consider that advice and reach your own decision.
Exercise Reasonable Care, Skill and Diligence
Directors must exercise the care, skill and diligence expected of a reasonably diligent person carrying out their functions.
Your actual knowledge, skill and experience are also relevant. A director with specialist expertise may therefore be expected to apply that expertise.
Avoid Conflicts of Interest
Directors should avoid situations where they have, or could have, an interest that conflicts with the interests of the company unless the situation has been properly authorised where permitted.
Do Not Accept Improper Third-Party Benefits
A director must not accept a benefit from a third party because of being a director, or because of something done or not done as a director, where accepting it would create a conflict.
Declare Interests in Proposed Transactions
If you have a direct or indirect interest in a proposed transaction or arrangement involving the company, you may need to declare the nature and extent of that interest to the other directors before the company enters into it.
Director Duties vs Director Responsibilities
The seven statutory duties concern how you act and make decisions as a director. In addition, directors have practical legal and administrative responsibilities for running a limited company.
Companies House
- annual accounts;
- confirmation statements;
- changes to directors;
- registered office changes;
- relevant PSC information; and
- other required company information.
Tax & Accounts
- maintaining adequate accounting records;
- approving statutory accounts;
- Corporation Tax compliance;
- PAYE where applicable;
- VAT where applicable; and
- monitoring company finances.
Governance
- following the articles;
- properly documenting important decisions;
- monitoring solvency;
- managing conflicts;
- protecting company assets; and
- keeping company affairs separate from personal affairs.
Can director responsibilities be delegated?
The work can often be delegated, but the director's underlying responsibility does not simply disappear.
An accountant can prepare statutory accounts, tax returns and Companies House filings, for example, but directors should still review information appropriately and ensure the company's obligations are being met.
Companies House Identity Verification for Directors
Director responsibilities now also need to be considered alongside the new Companies House identity verification requirements.
What directors need to know
Identity verification became a legal requirement from 18 November 2025, with implementation being phased in.
Existing directors generally need to provide their Companies House personal code as part of their company's next confirmation statement during the transition arrangements. New directors need to meet the identity verification requirements when incorporating a company or being appointed.
If you are a director of several companies, your identity normally only needs to be verified once, although your personal code must be used to connect your verified identity to each relevant directorship.
Identity can be verified directly through the Companies House/GOV.UK process or through a registered Authorised Corporate Service Provider (ACSP).
What Are the Duties of a Sole Company Director?
Being the only director does not remove the statutory duties. A sole director of an owner-managed limited company must still distinguish between decisions made as a director and their interests as a shareholder or individual.
Are Directors Still Responsible If They Use an Accountant?
Yes. Hiring an accountant does not transfer a director's legal responsibility for the company to the accountant.
Professional advisers can prepare accounts, calculate tax liabilities, submit returns and provide advice. Directors nevertheless remain responsible for running the company and should take reasonable steps to ensure that information supplied to advisers is complete and that important filings and liabilities are dealt with.
| Task | Accountant can help? | Director involvement |
|---|---|---|
| Prepare statutory accounts | Yes | Directors remain responsible for approving the accounts. |
| Prepare Corporation Tax return | Yes | Director should ensure accurate information is supplied and obligations are met. |
| Companies House filings | Yes | Directors remain responsible for ensuring required company information is filed. |
| Bookkeeping | Yes | Directors remain responsible for ensuring adequate accounting records are kept. |
| Business decisions | Advice can be provided | Directors must exercise their own judgement. |
Director Duties When a Company Is Insolvent
Director duties become particularly important when a company is insolvent or experiencing serious financial difficulty.
When a company becomes insolvent, directors must protect the interests of creditors and should take particular care not to worsen their position.
Warning signs directors should not ignore
- the company cannot pay bills when they fall due;
- HMRC liabilities are repeatedly unpaid;
- creditors are threatening legal action;
- the company's liabilities exceed its assets;
- there is insufficient cash to meet payroll or essential costs; or
- continuing to trade may increase losses to creditors.
Directors of a company in financial difficulty should obtain appropriate professional advice promptly. Insolvency law is highly fact-specific and delaying advice can make the position worse.
Can a Company Director Be Personally Liable?
A limited company is normally a separate legal entity, so directors are not automatically personally responsible for ordinary company debts simply because they are directors.
However, limited liability does not give directors unrestricted protection. Personal financial consequences can arise in particular circumstances, including certain breaches of duty, misfeasance, fraudulent trading, wrongful trading and some other forms of misconduct.
Directors can also face other consequences for failures to comply with their obligations, potentially including penalties, claims against them, prosecution for particular offences or director disqualification.
Company Director Duties Checklist
A useful director compliance routine should cover legal duties, company administration, tax and financial oversight.
Director Duties in Plain English
A company director is not simply the person whose name appears at Companies House. Directors have legal responsibilities for how the company is managed, how decisions are made and whether important statutory obligations are met.
The seven general duties in the Companies Act 2006 sit at the heart of those responsibilities. For an owner-managed business, good compliance also means maintaining accurate records, understanding the company's finances, meeting Companies House and HMRC obligations and taking professional advice when necessary.
You can delegate accounting and administrative work, but you should not simply disengage from it. A well-run limited company depends on directors understanding their responsibilities and having reliable financial information on which to make decisions.
Frequently Asked Questions About Director Duties
What are the 7 duties of a company director?
The seven general duties under the Companies Act 2006 are: act within your powers; promote the success of the company; exercise independent judgement; exercise reasonable care, skill and diligence; avoid conflicts of interest; not accept benefits from third parties where they create a conflict; and declare interests in proposed company transactions.
What is the most important duty of a company director?
There is no single statutory duty that replaces the others. Directors need to comply with all applicable duties. In practice, the duty to promote the success of the company, the duty to exercise reasonable care, skill and diligence and the obligation to monitor the company's financial position are particularly relevant to many everyday decisions.
Do director duties apply to a sole director?
Yes. A sole director generally has the same statutory director duties as a director sitting on a larger board. Owning all of the company's shares does not remove the distinction between the director personally and the limited company.
Are directors responsible for company accounts?
Directors are responsible for ensuring adequate accounting records are maintained and for approving the company's annual accounts. An accountant can prepare the accounts, but using an accountant does not remove the directors' underlying responsibilities.
Can I delegate my director responsibilities to an accountant?
You can delegate many accounting and administrative tasks to an accountant, but you cannot simply transfer your statutory duties as a director. Directors should remain appropriately involved and exercise their own judgement.
Do directors need to verify their identity with Companies House?
Yes. Identity verification is now a legal requirement being implemented by Companies House. Existing directors generally need to provide their Companies House personal code in connection with the company's confirmation statement during the transition arrangements, while new directors must meet the relevant verification requirements when being appointed or incorporating a company.
Can a director be personally liable for company debts?
Directors are not normally personally liable simply because a limited company owes money. However, personal liability or other consequences can arise in particular circumstances, including certain breaches of duty, wrongful trading, fraudulent trading or misfeasance.
What happens to director duties if the company becomes insolvent?
When a company becomes insolvent, directors must give particular consideration to creditors and should avoid actions that worsen their position. Directors should obtain appropriate insolvency advice promptly where a company cannot pay its debts or there are serious concerns about solvency.
Do director duties continue after resignation?
Some obligations can continue after a person stops being a director. For example, the Companies Act specifically preserves aspects of the duty concerning conflicts of interest in relation to certain property, information or opportunities learned about while a director, as well as aspects of the third-party benefits duty.
Who is responsible if an accountant misses a Companies House deadline?
Using an accountant or agent does not remove the directors' responsibility for ensuring the company's statutory obligations are met. This is why directors should maintain their own awareness of important filing deadlines even when an accountant handles the filings.
Need Help With Your Limited Company Accounts?
The Online Accountants are ACCA qualified accountants specialising in owner-managed limited companies. We can help with statutory accounts, Corporation Tax and ongoing company accounting and tax compliance.
This guide provides general information about UK company director duties and is not a substitute for legal or insolvency advice tailored to your circumstances.