Director’s duties are set out in the Companies Act 2006.

A new Director should always check the Company’s Memorandum and Articles of Association to ensure that the Director and indeed the Company itself, is acting within its powers, which are set out in that document.

Unlike an employee, a Director has other considerations when taking decisions on behalf of the Company.  These can have long term consequences which may or may not only benefit the Company but also have regard to the community at large, the interests of all employees, and indeed other matters including the Company’s premises, the effect on the environment of the Company’s activities and its overall liability. 

A Director also, jointly with other Directors has liability for the Company’s actions, and this can also be the case even if the Director has left the Company.

For example even though a person ceases to be a Director he or she is still liable to avoid conflicts of interest in respect of the exploitation of any property, information or opportunity of which he or she becomes aware at a time when he or she was a Director.  Similarly there is a duty on a Director not to accept benefits from third parties, and this duty subsists even though a person is no longer a Director. 

A Director of a Company must always exercise independent judgement.  In addition a Director has to exercise reasonable care, skill and diligence in carrying out his or her duties. 

A Director of a Company must also avoid a situation where he or she has a conflict of interest between his personal interests and those of the Company.

If a Director of a Company is in any way directly or indirectly interested in a proposed deal or arrangement, this interest must be declared as to the nature of that interest and its extent to the other Directors.

There are obviously other duties, which cannot be covered in detail in an article of this nature, but Directors should be aware that a breach of any of their duties could be enforced through the Courts.

Directors should always take care when dealing with Company affairs that decisions and proposals are properly documented and minutes and notes kept. 

For more information call Employment Law Advisory Services on 0161 785 2000 or visit www.employment-law.uk.com