Directors’ Duties and Liabilities

As a company director, you are bound to comply with the provisions of the Companies Act 2006, including abiding by the directors’ duties listed there. Failure to do so can result in legal action and as a result, you could be disqualified as a director and face personal liability for losses.

We understand how complex businesses can find this area of law and provide advice and guidance to ensure you are fully compliant.

We represent directors of companies of all sizes, including large international organisations, advising on regulations, the correct company procedures and managing recording and reporting requirements. We also deal with allegations of breach of directors’ duties.

Duties for directors

The Companies Act requires directors to:

• Act within their powers
• Avoid conflicts of interest
• Declare any personal interest in a transaction
• Exercise independent judgment
• Exercise reasonable care, skill and diligence
• Not to accept benefits from third parties
• Promote the company’s success

Directors must also maintain proper records, file appropriate information with Companies House and produce company accounts. They also have responsibilities in respect of issues such as financial regulation compliance, solvency and health and safety laws.

Breach of directors’ duties

Failing to comply with your duties as a director can have serious consequences. In the worst case, you could face imprisonment and financial penalties as some breaches are classed as criminal offences. You could also be held personally liable for substantial damages if your company suffers losses.

Advice and representation

We can advise you in respect of complex issues of compliance, including in respect of conflicts of interest, interest in a proposed business transaction and accepting benefits. These are areas that can be difficult to navigate and our team can ensure that you do not act outside of your powers.

Our Employment team also represents directors facing allegations of misconduct or potential disqualification.