CHRISTMAS OFFER Subscribe to Cotswold Life today CLICK HERE

Directors’ Duties: Ignore them at your peril!

PUBLISHED: 17:44 27 January 2015 | UPDATED: 17:44 27 January 2015

Colin Witherall - Associate – Head of Commercial
Brethertons LLP

Colin Witherall - Associate – Head of Commercial Brethertons LLP

Archant

Running a company has become a complex business, keeping up with the myriad of legislative changes and Colin Witherall, Head of Commercial at Brethertons LLP takes a look at the issues…

A company is a separate legal entity which means that it has duties and obligations in its own right and is not simply the embodiment of the owners (shareholders) or the managers (directors).

Shareholders’ rights and obligations are set out in the Articles of Association of the company and their liability is limited to their obligation to pay for their shares. They have the ultimate management power to remove the directors.

The management of the company is almost exclusively the domain of the directors and, consequently, they have a number of duties and obligations which could, potentially, involve them in personal liabilities. Their liability it is not limited.

Those duties and obligations also extend to non-executive directors. You do not have to be appointed as a director to assume those duties and obligations, you simply need to carry out the role. If you use the title “director” you could be a de facto director or if you influence or take fundamental decisions for the company you could be a shadow director.

Under the Companies Act 2006, for the first time, director duties were defined. A director must: exercise reasonable care and skill, act within their powers, exercise independent judgement, not accept thirdparty benefits, declare their interests, promote success and avoid conflicts. The principal obligation is to act in the best interests of the company.

Under the common law there are a variety of similar duties and legislation such as the Insolvency Act, Bribery Act, Health & Safety at Work Act impose personal obligations on directors.

Directors must protect themselves by having an awareness, by training or otherwise, of their obligations. They need to understand core documentation such as the Articles of the company. They should create clarity as to their obligations by having a director’s service contract. Practical measures such as putting in place Directors and Officers insurance should also be taken.

The essential role of the director is one of risk management and that includes risk management for the company and for themselves. If you have any queries about the content of this article, I’d be delighted to speak to you.

Colin Witherall - Associate – Head of Commercial

Brethertons LLP

www.brethertons.co.uk

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other Cotswold Life visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Cotswold Life staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Cotswold Life account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

More from Out & about

Mon, 13:15

Tracy Spiers takes an impressive, if hypothetical, budget on a shopping spree in Cheltenham’s independent stores

Read more
Mon, 12:23

Get out and enjoy seasonal celebrations with a Cotswold twist

Read more
Tuesday, December 4, 2018

If you’re looking for things to do in the Cotswolds this month, we have gathered plenty of events for you to pop in your diary

Read more
Tuesday, December 4, 2018

Hundreds of participating National Lottery-funded visitor attractions across the UK are saying ‘thanks’ to people who have raised money for good causes by buying a lottery ticket, including a number of venues in the Cotswolds

Read more
Monday, December 3, 2018

“We’re looking forward to lots of festive fun this Christmas festival and hope to welcome lots of people to our town.”

Read more
Monday, November 26, 2018

“Faringdon upholds old-fashioned values through its traditional shops, personal service and shop owners who go the extra mile to make their customers feel at home.”

Read more
Friday, November 23, 2018

Home to some of the country’s most breathtaking architecture and picturesque gardens, the Cotswolds boasts plenty of beautiful stately homes you need to visit. We pick eight special locations that are made even more magical during Christmas time

Read more
Tuesday, November 20, 2018

Taking the classroom outdoors is fun, inspires fresh ideas, broadens horizons – and encourages a new generation to enjoy and care for the Cotswolds

Read more
Monday, November 19, 2018

Chipping Campden – once the meeting place for a council of Saxon kings – now offers the warmest of welcomes to all its visitors, from the humble shopper to the seasonal shin-kicker

Read more
Thursday, November 15, 2018

As well as three days of action-packed racing and tradition, there’s plenty to do away from the course at this year’s November Meeting. Neil Phillips, The Wine Tipster, shares his 14 suggestions on how to make the most of your time at Cheltenham Racecourse

Read more
Tuesday, November 13, 2018

The Warwickshire town of Alcester is considered one of the best understood Roman settlements in the country. Tracy Spiers digs below the surface to discover its hidden jewels

Read more

Thanks to the impact of ground-breaking comedy This Country, the quiet market town of Northleach has become one of the Cotswolds’ hottest film locations. Katie Jarvis is sent to investigate

Read more
Tuesday, November 6, 2018

Stephen Roberts walks in the footsteps of the Oxford scholar who enjoyed attending parties dressed as a polar bear, and once chased a neighbour while dressed as an axe-wielding Anglo-Saxon

Read more
Tuesday, November 6, 2018

I send this postcard from Cirencester, complete with the discoveries and viewpoints from four members of my family – both the young and not so young

Read more

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

Our Privacy Policy

Topics of Interest

Food and Drink Directory A+ Education

Subscribe or buy a mag today

subscription ad

Local Business Directory

Property Search