Duties and Responsibilities of a Company Director (UK Guide)
Being a company director in the UK comes with significant legal, financial and ethical responsibilities. Whether you run a small owner-managed limited company or sit on the board of a growing business, your duties as a director are set out in law and enforced by Companies House, HMRC and the courts.
What Is a Company Director?
Many directors are surprised to learn that director responsibilities apply regardless of company size, and that personal liability can arise even when acting in good faith. This guide explains the duties of a company director in plain English, with practical examples to help you stay compliant and protect both your business and yourself.
A company director is legally responsible for managing the company on behalf of its shareholders. Directors make strategic decisions, oversee finances, ensure compliance with the law and act in the best interests of the company at all times.
You can be:
A sole director running your own limited company
A working director involved in daily operations
A non-executive director providing oversight
A de facto director, acting as one without formal appointment
Regardless of title, the same legal duties apply.
The Seven Core Legal Duties of a Company Director
UK company law sets out seven fundamental duties that every director must follow. These are not optional guidelines – they are enforceable legal obligations.
1. Act Within Your Powers
You must follow the company’s articles of association and only use your powers for their intended purpose. Decisions taken outside your authority can be challenged or reversed.
2. Promote the Success of the Company
You must act in a way you genuinely believe will benefit the company as a whole. This includes considering:
Long-term consequences of decisions
Employees and contractors
Relationships with customers and suppliers
The company’s reputation and conduct
3. Exercise Independent Judgment
Directors must make their own decisions and not simply follow instructions from shareholders, lenders or other directors without proper consideration.
4. Exercise Reasonable Care, Skill and Diligence
You are expected to apply:
The general knowledge reasonably expected of any director
Your own specific skills and experience
A qualified accountant director, for example, is held to a higher standard on financial matters.
5. Avoid Conflicts of Interest
You must not put yourself in a position where your personal interests conflict with those of the company, unless this has been properly authorised.
6. Not Accept Benefits From Third Parties
You must not accept gifts, commissions or incentives that could influence your decisions as a director.
7. Declare Interests in Company Transactions
Any personal interest in a proposed company transaction must be declared to the board before the company enters into it.
Everyday Responsibilities of a Company Director
Beyond legal duties, directors have ongoing practical responsibilities that keep the company compliant and financially healthy.
Financial Responsibilities
Ensuring accurate accounting records are maintained
Approving annual statutory accounts
Filing accounts and confirmation statements on time
Paying corporation tax, VAT and PAYE correctly
Monitoring cash flow and solvency
Companies House Responsibilities
Filing annual accounts by the statutory deadline
Filing the confirmation statement
Reporting changes to directors, shareholders or registered office
Keeping company records up to date
HMRC Responsibilities
Registering for corporation tax
Submitting corporation tax returns
Operating PAYE correctly if employees or directors are paid
Registering and accounting for VAT where required
Director Responsibilities vs Company Responsibilities
Many directors mistakenly believe compliance is “the accountant’s job”. In reality, legal responsibility always sits with the director, even when work is delegated.
| Area | Director Responsibility | Can Be Delegated? |
|---|---|---|
| Company accounts | Accuracy and approval | Preparation only |
| Tax compliance | Correct filing and payment | Yes, responsibility remains |
| Companies House filings | Timely submission | Yes, liability remains |
| Business decisions | Best interests of company | No |
Responsibilities When the Company Is Struggling Financially
Director duties change when a company becomes insolvent or close to insolvency. At this point, your primary responsibility shifts from shareholders to creditors.
You must:
Avoid taking actions that worsen creditor losses
Stop trading if there is no reasonable prospect of recovery
Seek professional advice promptly
Avoid paying some creditors in preference to others
Failing to act can result in personal liability or director disqualification.
Personal Liability: What Directors Are Personally Responsible For
Although a limited company is a separate legal entity, directors can still be held personally responsible in certain situations, including:
Fraudulent or wrongful trading
Unpaid PAYE or VAT in some circumstances
Overdrawn director’s loan accounts
Breach of statutory duties
Failure to keep proper accounting records
Limited liability protects shareholders — not misconduct.
Duties of a Sole Director
If you are the only director, you are still expected to:
Keep proper records
Make decisions in the company’s best interests
Maintain separation between personal and company finances
Comply with all statutory deadlines
Being a sole director does not reduce your obligations.
Consequences of Failing to Meet Director Responsibilities
Failure to meet your duties can result in:
Financial penalties
Personal repayment of company losses
Director disqualification (up to 15 years)
Damage to professional reputation
Criminal prosecution in serious cases
Most issues arise from lack of awareness rather than intent, which is why understanding your responsibilities is essential.
Practical Tips for Staying Compliant as a Director
Keep clear and accurate financial records
Review management accounts regularly
File accounts and tax returns well before deadlines
Separate personal and company finances
Take professional advice early, not when problems escalate
Document key decisions properly
Good governance is not about bureaucracy — it is about protecting your company and yourself.
Summary: Director Duties in Plain English
A UK company director must:
Act legally, honestly and responsibly
Make decisions in the company’s best interests
Ensure financial and statutory compliance
Avoid conflicts and improper benefits
Take extra care when the business is under financial pressure
Understanding and fulfilling your duties is one of the most important responsibilities of running a limited company.
Director Responsibilities Checklist (UK)
This practical checklist is designed for working directors, sole directors and owner-managed businesses. Reviewing it regularly helps demonstrate reasonable care, skill and diligence.
Ongoing Director Responsibilities
Understand and follow the company’s articles of association
Act in the best interests of the company at all times
Avoid conflicts between personal and company interests
Keep accurate accounting records
Monitor cash flow and company solvency
Ensure taxes are calculated correctly and paid on time
Maintain separation between personal and company finances
Annual Responsibilities
Approve statutory accounts before filing
File company accounts with Companies House on time
Submit the confirmation statement
Approve and submit the corporation tax return
Review dividend payments and supporting paperwork
Check director loan account balances
Event-Driven Responsibilities
Report changes to directors or shareholders
Update registered office details
Declare interests in company transactions
Seek advice if the company becomes financially distressed
Stop trading if continuing would harm creditors
This checklist reflects director accountability, even where tasks are delegated to accountants or advisers.
Director vs Shareholder: Roles and Responsibilities Compared
Many small business owners act as both director and shareholder. While the roles often overlap in practice, they are legally distinct.
| Area | Director | Shareholder |
|---|---|---|
| Legal responsibility | Personally responsible for compliance | No day-to-day legal responsibility |
| Decision-making | Runs and manages the company | Votes on major matters |
| Financial liability | Can be personally liable in some cases | Limited to share capital invested |
| Tax obligations | Ensures tax compliance | Pays tax on dividends received |
| Account filings | Must ensure timely filing | No filing responsibility |
Key takeaway:
A shareholder owns the company.
A director runs it and carries the risk.
Director Compliance Timeline
This timeline shows how director responsibilities typically flow through a financial year. It is particularly useful for first-time directors and sole directors.
| When | Director Responsibility | Why It Matters |
|---|---|---|
| Throughout the year | Maintain accounting records and monitor cash flow | Demonstrates reasonable care and oversight |
| Monthly / quarterly | Review management accounts and tax liabilities | Prevents solvency issues and surprises |
| Company year end | Ensure records are complete and accurate | Supports statutory accounts |
| 9 months after year end | File accounts with Companies House | Avoids penalties and public record issues |
| 12 months after year end | Submit corporation tax return | Statutory director responsibility |
People Also Ask
What are the main responsibilities of a company director in the UK?
A company director is responsible for managing the company lawfully, acting in its best interests, maintaining accurate financial records, ensuring timely filing of accounts and tax returns, avoiding conflicts of interest and exercising reasonable care, skill and diligence.
Can a company director be personally liable?
Yes. Although a company has limited liability, directors can be personally liable in cases of wrongful trading, fraud, unpaid taxes in certain situations, overdrawn director’s loan accounts or breaches of statutory duties.
What responsibilities does a sole director have?
A sole director has the same legal responsibilities as any other director. This includes compliance with company law, financial oversight, tax obligations, record-keeping and acting in the company’s best interests at all times.
Are directors responsible if an accountant makes a mistake?
Yes. Directors remain legally responsible even if tasks are delegated. Using an accountant does not transfer responsibility for accuracy or timeliness.
What happens if a director fails to meet their duties?
Consequences can include financial penalties, personal liability, director disqualification and, in serious cases, criminal prosecution. Most issues arise from lack of awareness rather than deliberate wrongdoing.
When should a director stop trading?
A director should stop trading when continuing would worsen creditor losses and there is no reasonable prospect of recovery. At this point, duties shift from shareholders to creditors.