Spire Accountants

 A director of a company must act in accordance with the company’s  constitution and only exercise powers for the purposes for which they  are conferred. 

A company’s constitution is its articles of association.

The directors should make decisions which are in the best interests of the company. They should also consider the impact of those decisions on shareholders, customers, employees, suppliers and the environment.

 A director must avoid a situation in which he/she has, or could have, a  direct or indirect interest that conflicts, or may possibly conflict,  with the interests of the company. 

A director may seek professional advice as long as he/she exercises  their own judgment in deciding how to proceed based on that advice. 

Directors should act in a way a reasonably diligent person would behave based on their general knowledge, skill and experience. 

 A director must not accept a benefit from a third party given by reason  of his/her being a director or by his/her doing anything as a director. 

 If a director is in any way, directly or indirectly, interested in a  proposed transaction or arrangement with the company then he/she must  declare both the nature and extent of this interest to the other  directors before the company enters into the transaction or arrangement. 

Directors must keep adequate and accurate company accounting records.  The records must show and explain transactions and disclose the  company’s financial position with reasonable accuracy. As a minimum,  accounting records must contain day to day entries of all sums of money  received and expended by the company as well as a record of the assets  and liabilities of the company. 

Failure to keep proper accounting records is a criminal offense  punishable by imprisonment or a fine. For persistent failure a director  may be disqualified  

Every company is required to keep certain statutory registers and to  provide access to them. These must be kept at the company’s registered  office or at some other place notified to Companies House.  

These registers include:

1. register of members; register of directors;
2. register of directors’ residential addresses (not open to public inspection); register of secretaries;
3. register of persons with significant control (PSC register); copies of all charges and mortgages; and
4. copies of directors’ service contracts.

Failure to maintain the records or submit a return within the required  timescales will result in the directors being liable to a fine. 

Data protection legislation sets out how personal data must be handled and relates  to the collection, recording, use, storage, disclosure and destruction  of personal data held by the company. Companies must be able to provide  evidence that the legislation has been complied with. 

Directors could potentially face personal liability of a criminal nature  should anybody within the company commit a breach of the legislation. 

 Directors owe duties to their employees and to persons not in their  employment but who may be affected by their undertaking (such as  contractors, visitors to their site, etc). These duties stem from the  Health and Safety at Work Act and related legislation. 

Where an offense under any health and safety legislation is committed by  a company and it is considered to have been  attributable to the neglect of any director of the  company, that person, as well as the company, will face proceedings for  breach of the relevant health and safety legislation. 

If convicted, penalties range from a fine to imprisonment for up to two  years and disqualification from acting in the capacity of a director for  up to 15 years. 

 A director must ensure that the company has reasonable prevention  procedures in place in order to prevent the facilitation of tax evasion. 

The Bribery Act imposes various obligations on a company and its directors.  

Companies could face an unlimited fine and individuals could face an  unlimited fine as well as a maximum prison sentence of 10 years.  Directors should conduct regular risk assessments and ensure that  adequate procedures are in place to prevent bribery.  

All companies have an obligation to file documents and updates with Companies House at certain intervals.

These are usually annual filings or a filing that is required as a  result of a particular event or change to the company. It is the  responsibility of the company’s directors to know when these filings are  required and to ensure that these filings occur on time. 

A director can be fined, prosecuted or disqualified if he/she does not meet his/her responsibilities. 

 If annual filings are not made then Companies House may assume that the  company is no longer carrying on business or is no longer in operation.  This may result in steps being taken to strike the company off the  register. The effect of this is that the company is deemed to no longer  exist and all assets become property of the Crown.