Seven Responsibilities of a Corporate Director

If you have just been appointed director of a company, congratulations. Even if the company is tiny and you are its only shareholder, you have taken on real legal responsibilities. Directors run the company on behalf of its members, and the law expects them to do so carefully, honestly and in the company's interest.

In the United Kingdom these responsibilities are set out as seven general duties in sections 171 to 177 of the Companies Act 2006. Most common law jurisdictions, including Hong Kong, Seychelles and the Marshall Islands, impose very similar fiduciary duties, so the principles below are a good guide wherever your company is registered. This is a general overview, not legal advice.

1. Act within your powers

A director must act in line with the company's constitution, mainly its articles of association, and use their powers only for the purposes for which they were given. Many UK private companies adopt the model articles; others have customised articles drafted by a lawyer.

Read your articles. They may require shareholder approval for certain decisions, limit borrowing or set rules for board meetings. If you exceed your authority, the decision can be challenged and you may have to compensate the company for any loss.

2. Promote the success of the company

This is the best-known duty. A director must act in the way they consider, in good faith, most likely to promote the success of the company for the benefit of its members as a whole. In doing so, section 172 requires directors to have regard to, among other things:

• the likely long-term consequences of a decision;
• the interests of employees;
• relationships with suppliers, customers and others;
• the impact on the community and the environment;
• the company's reputation for high standards of business conduct;
• the need to act fairly between members, including minority shareholders.

Decisions must serve the company as a whole, not one shareholder, one executive or another company in the group. Large companies must explain in their strategic report how directors met this duty, and companies with more than 250 UK employees must report how directors engaged with employees.

3. Exercise independent judgment

A director must form their own view. You can take advice from colleagues, lawyers or accountants, but you cannot simply follow instructions from a major shareholder or another person without thinking about whether the decision is right for the company. If you are new to the business, take the time to understand how it operates, how it makes money and what its main risks are.

4. Exercise reasonable care, skill and diligence

The days when someone could be a director in name only are gone. The law measures you against two standards:

• the general knowledge, skill and experience reasonably expected of anyone doing the same job; and
• the knowledge, skill and experience you actually have.

So a director who is a qualified accountant will be held to a higher standard on financial matters. In practice this means reading board papers, asking questions, monitoring the company's finances and getting advice when something is outside your expertise.

5. Avoid conflicts of interest

A director must avoid situations in which their personal interests conflict, or may conflict, with the company's interests. Typical examples are owning a competing business, using company information or opportunities for yourself, or having close links to a supplier. A conflict can be authorised by the other directors or by the shareholders if the articles allow, but it must be disclosed first.

6. Do not accept benefits from third parties

A director must not accept a benefit from a third party, such as a gift, commission or hospitality, given because they are a director or because of something they do as a director, unless it cannot reasonably be regarded as likely to create a conflict of interest. Keep a record of anything you receive and follow any company gifts policy.

7. Declare interests in proposed transactions

If you have a direct or indirect interest in a transaction the company is considering, for example the company wants to buy services from a business you part-own, you must declare the nature and extent of that interest to the other directors before the company enters into it. Existing transactions you become interested in must also be declared.

Keep records that show you met your duties

Board minutes are your evidence that decisions were properly considered. In the UK, minutes of directors' meetings and written resolutions must be kept for at least ten years. Years later, when nobody remembers why a decision was taken, the minutes will. WeForm clients keep corporate documents in their online dashboard alongside a compliance calendar.

Other legal obligations of a director

Beyond the seven general duties, directors are responsible for making sure the company meets its statutory obligations. For a UK company these include:

• keeping statutory registers and accounting records;
• filing annual accounts and the confirmation statement with Companies House on time;
• keeping the registered office address and officer details up to date (see registered address vs service address);
• registering for and paying corporation tax and other taxes;
• verifying their identity with Companies House. Since 18 November 2025, new directors must verify before appointment, and existing directors confirm verification with the company's next confirmation statement;
• considering the interests of creditors when the company is in or close to insolvency. Directors who continue trading when there is no reasonable prospect of avoiding insolvent liquidation can be made personally liable.

Offshore companies have their own rules. A Seychelles IBC, for example, must keep accounting records at its registered office; see our Seychelles IBC compliance checklist.

Setting up a company

If you are about to become a director of a new UK company, our guide to registering a company in the UK walks through the process, and LLC vs LTD vs corporation compares the common structures. WeForm registers UK private limited companies from GBP 175, including a UK registered office for 12 months, and forms companies in five other jurisdictions listed on all jurisdictions.

FAQ

What are the main duties of a company director?

To act within their powers, promote the success of the company, exercise independent judgment and reasonable care, avoid conflicts of interest, refuse third-party benefits and declare interests in transactions. Directors also make sure the company keeps records and files on time.

Do directors owe their duties to the shareholders?

Under the Companies Act 2006 the general duties are owed to the company itself, not to individual shareholders. When the company is close to insolvency, directors must also consider creditors' interests.

Can a director sell something to their own company?

Yes, if the director declares their interest to the board and the articles allow it. In the UK, substantial property transactions between a company and its director also need shareholder approval.

Does a director need to own shares?

No. A director does not need to hold shares unless the articles require it.