UK Directors’ Responsibilities

On becoming a director of a company, directors undertake to comply with various duties and responsibilities. Duties are specified in the Companies Act 2006 (CA 06) and generally encourage directors to act in the best interests of the company. However, there are also more practical, administrative responsibilities which the directors must comply with. In this article, we will explain how you can comply with these more practical responsibilities.

Records and Filings

Directors need to ensure that the company’s statutory registers and all Companies House filings are kept up to date and should aim to complete these filings as soon as possible once the relevant change has occurred. In the case of filings at Companies House, filings must be completed within the specified time limits (which can be as short as 14 days following the change).  If any details recorded in the company registers change (such as a change in registered office, change in a directors’ personal details (such as change of residential address) or there is a transfer of shares which means that amendments need to be made to the PSC register), the directors will need to update the specific register which provides those details and file the relevant details with Companies House.

Certain shareholder resolutions also require filing at Companies House. These resolutions are those which have great importance for the company such as any decision requiring a special resolution, but also some ordinary resolutions such as those which impact the powers to allot shares.

The company’s Annual Accounts and Confirmation Statement need to be filed with Companies House every year (these are discussed in more detail below).

Accounts

The company’s Annual Accounts need to be prepared and filed each financial year at Companies House or the company will face late-filing penalties. The directors are responsible for approving the Annual Accounts and are primarily responsible for ensuring they are accurate and producing a director’s report.

The director’s report must include:

•  the names of those who have been directors in that financial year,
• whether any dividends are recommended,
• whether there’s been any qualifying indemnity provision in relation to any of the directors, and
•  a statement by the directors that there is no relevant audit information and they’ve taken all reasonable steps to ascertain any relevant audit information, making any auditors aware.

In order to approve the accounts and have them accepted for filings:

• they must be put before the board of directors for approval; and
•  they must be signed by a director on behalf of the board.

The Annual Accounts must be filed within nine months of the end of the relevant accounting reference period.

The Annual Accounts also must be sent to the company’s shareholders by no later than nine months after the end of the accounting reference period or, if earlier, the date on which the company actually delivers the accounts and reports to Companies House.

Confirmation Statement

The directors are required to file a confirmation statement each year confirming that the company is carrying out lawful activities, and confirm that there are no changes to the registered office, registered email address, PSCs, and location of company records. If one of these details change, the confirmation statement can be filed at the same time, which restarts the 12 month period.

The confirmation statement needs to be filed within 14 days after the end of each 12 months period.

Directors meetings

As standard, model articles do not provide a specific number of meetings which should be held but a monthly meeting of the board to consider key business issues is usually considered good practise. Directors and shareholders may decide to amend the articles to provide a more formal requirement for directors to meet regularly.

Any director can call a meeting by notifying each director. At least 2 directors need to be present to vote on any proposals and form a quorum for the meeting (unless there is a sole director). All directors do not need to attend. Any present director can chair a meeting and has a casting vote if part of the quorum.

If a director has an interest in the decision which is being tabled at the meeting, they may find themselves unable to form part of the quorum and vote on the decision. If the company runs into the issue that they are unable to vote due to not being able to form a quorum, the model articles do provide provisions to help remedy this. In most cases a company may choose to amend the articles in order to remove this restriction.

Shareholders meetings

As with director meetings, model articles do not specify a limit to the number of shareholder meetings which must be held for a private limited company. Public companies however are under an obligation to hold at least 1 general meeting a year. Any directors may attend and speak at shareholder meetings, even if not shareholders themselves.

Any director can call a general meeting by giving to the shareholders at least 14 days’ notice (21 days’ for PLCs) of the time, date and place of meeting, and the general nature of what business is to be dealt with, along with information as to how a shareholder can have a proxy take their place.

A shareholder may have a proxy take their place at the meeting if they can’t attend which must be delivered before the start of the meeting. The notice of the shareholder meeting must be sent to each member, director and auditor.

Two or more shareholders (or their proxies) must be present in order to form a quorum.

Voting takes place via show of hands unless a poll is requested.

Dividends

Dividends can be made by ordinary resolution of the board and can be distributed via whatever method the directors decide subject to the articles of association and any shareholders’ agreement a company may have in place.

There’s nothing specific in the model articles to limit the Directors’ powers on approving dividends.

Contact Us

These responsibilities above may be varied via company articles or shareholder’s agreement if you would like to expand on or clarify the responsibilities which you expect directors to comply with in your company.

Our corporate lawyers are available to answer any queries you may have regarding directors’ responsibilities. We can help implement any changes to the model articles to better suit the needs of your company or advise you on any queries you have regarding the responsibilities discussed above.