Company directors and company secretaries are collectively known as company officers. The term ‘company officer’ can be used to refer to either or both of these official positions within a limited company.
In this blog, we will consider the duties and responsibilities of company officers.
All limited companies in the UK are required to have at least one company director. In some companies, the sole company officer will be a director.
Company directors are responsible for the overall management of the company. They also have a range of legal responsibilities, such as ensuring that company accounts are kept up to date and regularly submitted to Companies House.
What are directors’ responsibilities?
As key company officers, directors have a variety of responsibilities, including:
- following the rules laid out in the company’s articles of association
- maintaining company records and reporting any changes to Companies House
- filing annual company accounts, confirmation statements, and company tax returns
- payment of corporation tax
- maintaining the company’s register of People with Significant Control (PSC register)
- abiding by the seven general directors’ duties (see below)
Company directors can be fined, prosecuted, and even disqualified if they fail to comply with their responsibilities. If they are disqualified, they will no longer be able to serve as company officers for the duration of the period of disqualification.
Although company directors can employ other people to manage some of their responsibilities, they are ultimately legally responsible if anything goes wrong. For example, if there are any discrepancies in the company’s accounts, they can still be held responsible even if they have an accountant.
What are the seven general directors’ duties?
Under the Companies Act 2006, there are seven general duties that all company directors, as key company officers, must uphold:
1. Duty to act within powers
All company directors must act within their powers under the company’s articles of association. The articles, along with the memorandum of association, form the company’s constitution. All company officers must follow the company’s constitution.
Many limited companies will use the model articles of association, which are essentially a template prescribed by the Companies Act 2006. But some companies choose to create their own bespoke articles. Whether they use model or bespoke articles, it’s vital that company directors are familiar with their contents, to ensure they are always acting within their powers.
2. Duty to promote the success of the company
Although it may seem like an obvious goal for any genuine company officer, there is a statutory duty for directors to promote the success of their company. Larger companies with more than 250 employees are even required to report on their compliance with this duty.
In complying with this duty, directors must have regard to:
- the likely consequences of any decision in the long term
- the interests of the company’s employees
- the need to foster the company’s business relationships with suppliers, customers, and others
- the impact of the company’s operations on the community and the environment
- the desirability of the company maintaining a reputation for high standards of business conduct
- the need to act fairly as between members of the company
3. Duty to exercise independent judgment
It’s vital that company directors retain their ability to form independent opinions and exercise their own judgment.
Although they can seek advice from fellow company officers or external experts, directors should never blindly follow instructions. Nor should they feel compelled to make decisions to comply with the wishes of major shareholders.
4. Duty to exercise reasonable care, skill and diligence
Section 174 of the Companies Act 2006 states that a company director must “exercise reasonable care, skill and diligence” in the performance of their duties as a company officer. In particular, this means that they must employ the “care, skill and diligence” that would be exercised by a reasonably diligent person with:
- the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and
- the general knowledge, skill, and experience that the director has.
In other words, a company director needs to live up to their title and take the role of a company officer seriously.
Furthermore, if a director has any specific professional skills or experience, they will be held to an even higher standard.
5. Duty to avoid conflicts of interest
Section 175 of the Companies Act states that a company director must avoid any conflicts of interest.
This can include a situation in which they have a “direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company”. In particular, this applies to the exploitation of any property, information, or opportunity which belongs to the company.
6. Duty not to accept benefits from third parties
Company directors should not accept any gifts or benefits from a third party that are conferred simply due to their position as a company officer.
Equally, they should not accept any gifts or benefits which are given due to their action or inaction as a company director. The most obvious example is where a supplier is offering some form of bribe to obtain a procurement contract.
7. Duty to declare interest in proposed transaction or arrangement
Under section 177 of the Companies Act, if a company director is ever “directly or indirectly, interested in a proposed transaction or arrangement with the company” they must declare the nature and extent of that interest to the other directors. This declaration can be made at a board meeting or by written notice.
All of the above duties still apply, even if a company director is:
- not active in their role as director
- acting as a director but has not been formally appointed
- in control of a board of directors without being on it
- following the orders of someone else
Company secretaries are also considered to be company officers, alongside the directors. Their duties depend on the size and type of company, but can include:
- maintaining the company’s statutory registers
- updating the records held by Companies House
- looking after the company’s registered office
- keeping up to date with all matters of corporate governance
- providing advice to the board of directors on their legal and corporate responsibilities
- arranging board meetings and shareholder’s annual general meetings
- taking minutes of corporate meetings
- ensuring the company complies with its corporate responsibilities and all relevant laws and regulations
Although company secretaries may carry out many of the tasks which would otherwise fall to a company director, the directors remain legally responsible for the company. However, it is possible for a company secretary to also be a company director, and wear both hats of these different company officers.
Do all companies need a company secretary?
Subject to the company’s articles of association, there is no legal requirement for a private limited company to have a company secretary. Public limited companies (PLCs) are required to employ a company secretary in accordance with section 271 of the Companies Act 2006.
Although many smaller companies will not have a company secretary, in their absence the tasks which they would normally fulfil will fall to the other company officers, namely the directors.
Do company secretaries need to be qualified?
In private companies which choose to appoint a company secretary as one of their company officers, there are no qualification or experience requirements.
But in a PLC, it is important to choose a company secretary who has the necessary skills and qualifications. Under section 273 of the Companies Act, they should have one of the following qualifications:
- They should have held the office of secretary of a public company for at least three of the five years immediately preceding their appointment as company secretary.
- They are a member of any one of the following bodies:
- the Institute of Chartered Accountants in England and Wales
- the Institute of Chartered Accountants of Scotland
- the Association of Chartered Certified Accountants
- the Institute of Chartered Accountants in Ireland
- the Institute of Chartered Secretaries and Administrators
- the Chartered Institute of Management Accountants
- the Chartered Institute of Public Finance and Accountancy
- They are a barrister, advocate or solicitor called or admitted in any part of the United Kingdom.
- They are a person who, by virtue of their holding or having held any other position or being a member of any other body, “appears to the directors to be capable of discharging the functions of secretary of the company.”
What are the requirements for company officers?
Although they do not require any formal qualifications in private limited companies, there are certain legal requirements for company officers:
- A company officer cannot be a disqualified director
- A company officer cannot be an undischarged bankrupt
- A company officer cannot also act as the company auditor
In addition, company directors must be at least 16 years of age.
The addresses and personal information of company officers
Company officers do not have to live in the UK but companies must have a UK registered office address.
The names and personal information of company officers are publicly available from Companies House search. Company officers must provide a service address, also known as a correspondence address, which also appears on the public register.
If a company officer uses their home address as their service address, they can later ask Companies House to remove it from the public register, but an alternative address will need to be provided.
Changes to company officers
It is important to inform Companies House about any changes to any of the company officers, including:
- New appointments of company officers
- Resignations of company officers
- Changes to the personal details of company officers, such as residential or service addresses.
So there you have it!
We have covered the duties and responsibilities of company officers, including the requirements for company officers, and the addresses and personal information of company officers.
We hope you have found this article of interest. If you have any questions, please leave them in the comment section below and we will get straight back to you!