Home Business Corporate What is the Role Played by the Company Directors in the U.K. Companies?

What is the Role Played by the Company Directors in the U.K. Companies?

7 min read

The company directors have a crucial role to play, acting as well as taking decisions on behalf of the company. The directors must make sure that all the legal requirements are complied with. The company directors have several rights and responsibilities that are exercised collectively by the board of directors. The board of directors has a significant say in

  • Formulation of company’s objectives and policies
  • Appointment of the employees, especially senior management of company
  • Monitoring progress
  • Exercising accountability to the shareholders
  • Remaining responsible to the relevant stakeholders

This list is not exhaustive and the company directors have several other duties to a given organisation.

An Overview of Company Directors

You need two different types of company directors while you form a company. They are the executive directors and the non-executive directors.


We all are familiar with the board of the executive directors. They take care of business on a day to day basis.

Also an employee of the organisation, they are given the charge of a specific area of business.

The rights, duties and the status of the executive director are different from the ones arising out of employment. In case a trouble arises, both the aspects are considered separately.


The non-executive directors do not work for the company on a day to day basis and may meet once a month or less. Their main role is to observe that the organisation is run by the executive directors appropriately. They attend the board meetings and their duties and responsibilities towards the company are similar to the executive directors.

Financial Obligations

The company directors must ensure that the accounts of the company are ‘true and fair view’ of business finance.

The company directors must ensure that the requisite documents are sent to Companies House on time. These documents include

  • Annual returns
  • Accounts
  • Corporation tax return

They must clear tax liabilities and trade properly so that the financial liabilities of business are met with.

Though you can always take the help of the accountants to facilitate preparing company accounts, the director remains responsible for the completion of these duties on time.

Legal Responsibilities

The company directors have several legal responsibilities towards the company. Just as it is the case with the financial obligations, it is possible to get the aid of someone to handle the job, but at the end of the day, ensuring that the obligations and actions are perfectly taken care of is the responsibility of the directors. Here are some of the legal responsibilities of the directors


  • Registering with HMRC for tax
  • Completion and return of Annual Return
  • Notifying Companies House in case there is any alteration in the registered company address
  • Act for the betterment of the company shareholders. The directors can never enrich themselves in a way that is damaging to the business.
  • Maintain company accounts and registers
  • Allow inspection of the statutory records
  • Maintain company stationery as well as signage

Statutory Responsibilities

The Companies Act states the ways directors are supposed to act or account for a given set of actions. Here are a few statutory responsibilities of the directors.

  • To act in accordance to the constitution of the company
  • Use independent judgement
  • Promote success of the organisation
  • Stay away from the ‘conflicts of interest’
  • Avoid accepting benefits from the third parties

The directors are allowed to exercise all the powers of the company but in some instances, the Articles of Association may put a few restrictions. Some of the most common sectors where we see these restrictions include

  • Allotment of shares
  • Borrowing on behalf of the company

The articles also define the ways decisions are to be taken. Though the directors of the limited company usually act together, the articles often permit the board to empower a given director to perform a duty as appropriate. The role of the individual director will depend upon the size of the organisation, the number of directors as well as the nature of business.

The directors may be removed from their position in cases of breach of legal or contractual duties. At times, inability to adhere to a given responsibility may call for personal prosecution. The company may also face a penalty in instances of late filing. In the severe cases, companies may face dissolution as well.

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Allan Lloyd has more than five years of experience as a content developer. A web enthusiast, he has a penchant for framing content for diverse industries. He has framed content for different blogging platforms. His areas of interest include health, business, news, entertainment and home improvement. He frames informative write ups and tries to make all of them interesting for the readers.

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  1. sujomathew

    March 28, 2016 at 12:10 pm

    Great post, apart from managing companies finance and accounts the business directors have very crucial responsibilities hope you will learn and update it soon


    • Karthik Linga

      April 1, 2016 at 12:01 pm

      Thank you so much for visiting our blog !! Keep readings, I hope you like our presence of information !!



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