Director Duties

 

You’ve just formed your new company and have appointed yourself as a director. But what does it really mean to be a director? What is expected from you and what are your legal responsibilities? In this article, we explore what is generally expected from a director and what your statutory obligations are, because it is not a role that should be accepted lightly.

What does a director do?

Directors are generally responsible for determining the company’s strategy, monitoring the company’s progress and reporting on the company’s activities to the relevant parties, such as shareholders.

What are the Director’s Duties to the Company?

When you are appointed a director of a company you become an officer with extensive legal responsibilities. The Companies Act sets your duties in detail but essentially a director is required to act in good faith and in the interests of the company and not in the interests of any other parties (including shareholders). Of course, as a director you must also make sure that proper books and records are maintained, so the financial position of the company can be determined.

Reporting to the Companies Registration Office (CRO)

A big difference between operating as a sole trader and a company is that a director has a personal responsibility to deliver statutory documents to the CRO as and when required. These include, in particular:

• accounts;
• annual returns; and
• notice of change of directors or secretaries or in their personal details

It is also the responsibility of the directors to ensure that the company maintains full and accurate accounting records.

Although the director’s are technically personally responsible for delivering this information to the CRO there is no reason why they cannot delegate these tasks to say, their accountant.

Non-compliance

Contrary to popular belief, directors may incur personal liability; both civil and criminal, for some offences. Even failure to file the accounts or annual return to the CRO is a criminal offence and can lead to prosecution and a fine in addition to any late filing penalties

We can help

If you would like to concentrate on running the business, we can assist you with complying with your duties as a director. In addition, we can provide you with the following services: tax returns, payroll, end-of-year accounts and book-keeping.

 

Date published 22 May 2014

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.