What are the legal responsibilities for directors?

The Companies Act 2006 sets out seven statutory duties of a director:

  • To act within powers, and to comply with the company’s constitution.

  • To act (in good faith) to promote the success of the organisation.

  • To exercise independent judgment.

  • To exercise reasonable care, skill and diligence.

  • To avoid conflicts (or possible conflicts) of interest.

  • Not to accept benefits from third parties.

  • To declare any personal interests.

There are also general duties to act:

  • In the interests of creditors (especially in times of financial difficulty).

  • In the interests of its employees.

  • With regard to the long-term consequence of any decision in mind.

  • Confidentially.

  • With regard to relationships with suppliers, customers and generally with its local community and the environment.

  • To maintain reputation.

  • To act fairly as between members of the organisation.

There are also specific duties including:

  • The obligation to file information at Companies House.

  • Not to trade whilst insolvent.

  • To operate in accordance with the relevant Health and Safety regulations.

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