If you are contracting via your own limited company, there are several duties you must perform by law as a company director. You also have several financial and legal responsibilities that you should be aware of.
Limited Company Director – Duties
The introduction of the Companies Act 2006 codified the duties and obligations of limited company directors for the first time.
The seven duties are (in summary):
You must always act within your powers as a director.
Directors must promote their companies.
Directors must exercise independent judgement.
You must use reasonable care, skill and diligence.
You must try to avoid conflicts of interest.
You must not accept benefits from third parties.
You must declare any interests in any proposed transactions/arrangements with your company.
New Duty: Directors are now encouraged to consider the long-term impacts of their decisions on key stakeholders, including employees, customers, and the environment. Corporate responsibility, sustainability, and ethical practices are increasingly expected of companies and their directors.
Main Financial Duties
Although most limited company owners hire an accountant to handle their tax and accounting obligations, the company directors are ultimately responsible for ensuring that all accountancy tasks are completed accurately and in a timely manner.
Some of the main responsibilities you have as a company director are:
You must ensure that you pay any employees correctly, and account for income tax and National Insurance deductions at source, where applicable.
You must always trade solvently.
You must only declare dividends when profit is available in the company to distribute legitimately.
New Financial Requirement: With the rollout of digital tax submission platforms, directors are now required to ensure real-time tax compliance. Missing deadlines for digital submissions may result in new fines or penalties, making it crucial to stay up-to-date with these systems.
Main Legal / Statutory Duties
Some of the key legal responsibilities you will have as a company director include:
You must inform Companies House if any of your company or personnel details change at any time (e.g. changes to address / name / share capital). You can submit most of these changes online via WebFiling.
Your company must abide by all prevailing employment, health & safety, and company laws and regulations.
You must always act in the best interests of your shareholders.
The company directors must not enrich themselves to the detriment of the company.
New Legal Responsibility: Directors are also increasingly expected to oversee data protection and cybersecurity compliance to protect company and stakeholder information. This includes complying with the General Data Protection Regulation (GDPR) and implementing security measures to safeguard sensitive data.
