RESPONSIBILITIES

association. This duty continues to apply if you are no longer a director. You must not take advantage of any property, information or opportunity you became aware of as a director.

THIRD-PARTY BENEFITS

You must not accept benefits from a third party that are offered to you because you are a director. This could cause a conflict of interest. The company may allow you to accept benefits like reasonable corporate hospitality if it is clear there is no conflict of interest.

Interests In A Transaction

You must tell the other directors and members if you might personally benefit from a transaction the company makes. For example, if the company plans to enter a contract with a business owned by a member of your family.

These duties will still apply even if: y you are not active in your role as director y someone else tells you what to do y you act as a director but have not been formally appointed y you control a board of directors without being on it

Other Responsibilities

As well as the above statutory responsibilities, there are other responsibilities that directors have to undertake to ensure the smooth running and growth of the business. These include:

Keeping company records – which must include up-to-date records about the company and its financial transactions.

These will also include: y Statutory registers of shareholders, directors and company secretaries y Accounting and finance records, and preparation and filing of the annual statutory accounts at Companies House y Preparation and filing of company tax returns y Resolution and minutes of meetings y Stock transfer forms and share certificates

Minutes of board meetings must be kept for ten years as these provide a record of the board’s decision-making process. This can be particularly important if the evidence is required later to confirm that the directors’ responsibilities were fulfilled in relation to any crucial decisions which were made.

In practice we often find that in owner managed businesses minutes of meetings are not well maintained.

Company Changes

Over time changes may occur in the company. The directors are responsible for notifying any changes to Companies House. These can include:

A change of registered office address, change of company name, change of the location of statutory records, issue of shares, change of articles of association, etc.

Compliance With Legislation

There are also regulations and legislation that must be considered when running a company including employment law, consumer rights, health and safety laws, trade descriptions, etc. Directors’ responsibilities include ensuring these are complied with.

Directors must also ensure that equal consideration is given to all shareholders. The articles of association will usually outline and include protections to ensure minority shareholders are included in the decision-making process and their interests are considered.

Think Before Becoming A Director

The role of a director involves many responsibilities and ultimately a breach by a director of their legal duties exposes them to possible legal action. When setting up a company or being invited to become a director, it is always advisable to seek reliable legal and financial advice. That way you can be sure to comply with all the legislation to run the company and act in the capacity of a director, legally, and as effectively and efficiently as possible.

Andrew Croxford is the Senior Partner in Thomson Cooper with offices in Dunfermline and Edinburgh. He heads up their audit and corporate finance departments and acts as auditor and business adviser to many companies operating in the automotive sector. www.thomsoncooper.com

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