The position of director bestows a certain status upon an individual.
Whether you are appointed to the Board of the company you work for
or you are involved in establishing a new business and take on the role of director
you will feel a sense of achievement.
However the office of director should not be accepted lightly.
It carries with it a number of duties and responsibilities.
These complex provisions are summerised below.
You can undertake business in the UK as either
When you are appointed a director of a company you become an officer with extensive legal responsibilities.
You are normally appointed by the Board and the appointment is confirmed by the shareholders.
You can usually resign as a director at any time, but can only be removed by the shareholders.
The rules of the company may vary these procedures.
There are two separate types of responsibility
COMMON LAW DUTIES
As a director you should
Directors of a company are required by law to produce accounts.
The law specifically covers the following matters.
Proper records must be maintained as defined by the Companies Act.
You are required to prepare accounts for each year to a date which is registered at Companies House.
The accounts must give a true and fair view and must comply with the form and content prescribed in the Companies Act.
A copy of the accounts must be provided to each shareholder.
The accounts must be filed at Companies House within a specific period after the year end.
Failure to meet this deadline will result in automatic penalties on the company.
Very large companies must file their full accounts but others can file an abbreviated version.
Many companies are required to have an audit.
This confirms that the accounts give a true and fair view.
Smaller companies are exempt from the audit requirement.
The above requirements are complex and professional advice will be required to ensure compliance.
Company law establishes a number of administrative requirements which you must comply with.
If your company should get into financial difficulties there are a number of ways in which you could face liability as a director.
This is committed when a company intentionally defrauds its creditors.
However few actions are successful because dishonest intent must be proved.
When a company is in insolvent liquidation the courts can require a contribution from any directors
found guilty of wrongful trading.
To avoid liability directors must show that from the moment insolvency became inevitable
they took all possible steps to minimise the loss to the creditors.
The law relating to companies in difficulty should not be underestimated.
Expert insolvency advice should be sought sooner rather than later.