Direct answers on the role of directors

Some frequently asked questions about the responsibilities of company directors. And some straightforward responses from Jonathan Wilson of Barnett & Turner. How do you set up a limited company?

It’s an easy online process which can be done for as little as a £15 fee. The company will be registered within 24 hours, although often it makes sense to instruct a formation agent to ensure the new company’s statutory books are completed with relevant and correct information from the beginning of the company’s life. This will result in a greater fee than above but it is often money well spent.

Does a company need directors?

It must have at least one director, although it’s a simple procedure, as no test or qualifications are involved. You don’t even need to understand the rules and duties of a director to become one. It is essential, however, you are over the age of 16 and have not been disqualified.

Where are the director’s duties set out?

Chapter 2 of the Companies Act Part 10.  The same framework applies to a ‘shadow’ director, who effectively performs a director’s functions without being formally appointed.

What is expected of a director?

Directors are responsible for promoting the best interest of the company and its shareholders, rather than their own personal interests. They need to act with the care, skill and diligence of a reasonable person, although if they have a specialist background – accountancy, for example – there would be an expectation that they would perform to a higher standard.

A director is also responsible for a company’s compliance with regulations – keeping proper books and records, lodging accounts, filing tax, VAT and PAYE and so on.

What are the Articles of Association?

This is a document which may set limitations on the power of directors and define how decisions should be made. Effectively, it’s the constitution of the company.

What are a director’s potential liabilities?

Contrary to popular perception, it is possible for Directors to be held personally liable if they breach duties owed to the company and set out in the Companies Act. A failure to file tax returns, for instance. Wrongful or fraudulent trading. Or continuing to trade when you know there is no chance of avoiding insolvent liquidation.

If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at