Company Directors' Duties in the United Kingdom

Before the Companies Act 2006, the duties of directors were derived from case law and common law but the current Act is a first attempt to codify the duties. The general duties are laid out in sections 170-177. They are not exhaustive but do attempt to set out general principles and every director must make themselves familiar with these duties. A director must:
• Act within powers - taking account of the company's articles and decisions taken by the company;
• Promote the success of the company - a director must act in the best interests of the company as a whole including taking account of the interests of shareholders and employees;
• Exercise independent judgment - a director should not subordinate their powers to the will of others;
• Exercise reasonable care, skill and diligence - a director will be judged according to what may reasonably be expected of a person in his position, e.g. a finance director will be expected to know about accounting matters;
• Avoid conflicts of interests - it is important that the company's articles are drafted carefully in this regard;
• Not accept benefits from third parties;
• Declare interest in transactions or arrangements.
There are of course many additional specific duties that a director must be aware of, e.g. the duty to file accounts and annual returns. As the main principles are now set out in statute, it is more important than ever that directors are fully aware of what is expected of them.
Disclosure under the Companies Act 2006
Following on from the previous Companies Act, the 2006 version re-iterates many of the requirements regarding disclosure of certain information, with some updates. Some key points are as follows:
• Every company must include its registered name in all its business correspondence in hard copy, electronic format or any other form. Particular attention must now be paid to emails and websites.
• Every company must display its registered name:
- at its registered office and its inspection place, the only exception being companies that have been dormant at all times since their incorporation.
- at any place where the company carries on business, unless that place is mainly used as a home, e.g. the director's address.