DIRECTORS DUTIES

The Companies Act 2006 sets out for the first time, the statutory duties of a Company Director. This new code covers both a full Board Members and Non-Executive directors. The code is introduced in two sections with parts 1-4 from October 2007 and parts 5-7 in March 2009.

GENERAL DUTIES:-

1. Act within director’s powers
2. Promote success of the Company for the benefit of its’ members as a whole whilst taking into account the interests of its’ employees.; the impact of its’ operations on the community and environment as well as maintaining a high standard of business conduct and reputation. This rule can be expanded to include creditors of the Company, subject to any enactment or, rule of law.
3. Exercise independent judgement.
4. Exercise reasonable care , skill and intelligence.
5. Avoid any conflicts of interest.
6.  Avoid acceptance of benefit from any third parties.
7. Declare to other directors, any interests in a proposed transaction or, arrangement with the Company.

Failure to comply with these duties, can lead to harsh penalties and even to disqualification of a director from office for between two and fifteen years. It is possible in certain circumstances, that directors can be made personally liable for business debts or, even face criminal proceedings. It is every directors’ duty to understand the Business and its’ financial position at all times.

Ignorance of the law is no defence in the event of a failure under the rules. Many Non-Executive Directors lack the knowledge of what they are appointed to do and remain ignorant of the duties and responsibilities of their official position.
If in any doubt, seek the assistance of Pilbro Accountancy and Tax.