UK businesses are regulated by and must comply with the Companies Act. The latest version was approved by the Queen on the 8th of November 2006 and became the most important business-related reform in the last 150 years. It contains a whole part dedicated to company directors, their duties and liabilities. We have complied some key points in this article.
Both UK residents and non-residents can become a company director in the United Kingdom. At the same time, undischarged bankrupts or people who have been disqualified as the director of a company cannot become a UK director. Besides, criminal and civil offences will be taken into consideration. It is possible for a legal entity to become a corporate director; however, current legislation requires at least one individual to be a company director and that individual must be at least 16 years old.
English laws permit the use of nominee services. If you do not live in the UK, a nominee director can manage the company on a day-to-day basis – the scope of their duties and responsibilities is determined by you. At the same time, please be aware that the Companies House have records of all people with significant control over the company. Our incorporation experts would be glad to help you find a UK resident who you can trust to become director of your company.
The Companies Act 2006 is very specific when it comes to the duties of a director in a UK company to act in the best interests of the company and its shareholders. Directors must make decisions that promote the company’s success; they must perform their duties conscientiously and to the best of their ability.
Directors must comply with the company’s constitution and articles of association and apply any knowledge, skills and experience they have. They are the ones who need to make sure that the company’s activities do not have a negative impact on the environment and community. Directors must keep high standards of business conduct by maintaining company’s reputation at a high level. They must also think about people that work for the company, their wellbeing and safety.
There are obligations of a director that they are bound by law to fulfil. They must make sure that all the reports are prepared and filed on time and that all taxes are paid when due, and that all the company’s details are published and updated correctly wherever necessary. If these legal requirements are not complied with or a mistake is made in carrying out its activities by the company, the responsibility will lie with a director and not an accountant. One must not forget that there is always a risk of legal prosecution.
Directors must also file their personal tax returns once a year. It is interesting that a director is not prohibited from acting in his personal interests, for example when the company signs a deal with another company that belongs to the director’s family. However, the director must invariably inform other directors, shareholders and owners about it. On top of that, a director is not allowed to accept benefits from third parties.
The Companies Act 2006 has been designed to help UK company directors fulfil their obligations and duties in a most efficient manner and to protect dutiful directors from too much pressure from shareholders if it is bound to affect long-term development of the business.
Directors of successful and large companies in the UK often work on strategic matters with the help of experts. Small businesses are different in this regard because most decisions are made single-handedly with no access to professional advice or forecast, and this is definitely not good for a business. However, all directors must show the same level of performance.
If you have questions regarding registration of a company in the UK, necessary paperwork, accounting and tax support for your business, our experienced specialists will give you expert advice and provide comprehensive support at every stage of your business development.
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