duties of a director
DESCRIPTION
TRANSCRIPT
We outline the code of conduct for directors of private limited companies following company formation.
DUTIES OF A DIRECTOR OF A NEWLY SET UP COMPANY
A director of a new company registration has a wide range of important duties after setting up a company and as such it is important that any
newly appointed director is aware of them.
This presentation highlights the duties involved for new directors and also gives advice as to how to avoid being in breach of these duties.
GENERAL DUTIES
Acting within their authority as directors
Acting in a way which promotes the interest of the new company formation
Exercising reasonable care, skill and diligence
CONSTITUTIONAL AND CONTRACTUAL DUTIES
Directors have a duty to act in accordance with any constitutional or contractual agreements.
Examples of these include: Memorandum of Association Articles of Association Shareholder Agreements Employment Agreements Service Agreements Staff Handbooks Board Resolutions
DUTY TO EXERCISE INDEPENDENT JUDGMENT
Broadly this means that directors cannot allow others to influence their decisions or to make decisions for them.A director will not breach this duty if they:
act in accordance with an agreement entered into by the newly set up company which restricts the exercise of the directors’ discretion
act in a way authorised by the companies’ constitution
rely on the advice or work of others in making their decisions
DUTY TO AVOID CONFLICTS OF INTEREST
Directors have a duty to avoid conflicts of interest after they register a company.
Where one may arise they will need to disclose this to non-conflicted directors and allow them to make the decision regarding the relevant transaction.
DUTY NOT TO ACCEPT BENEFITS FROM THIRD PARTIES
Directors must not accept benefits from third parties for being a director.
However they will not be in breach of this duty if the acceptance of such benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.
FIDUCIARY DUTIES
Directors have a duty in law to act in good faith for the best interest of the company after it has taken part in the company registration process.
This includes a duty to: Act properly Not make secret profits Avoid conflicts of interest.
MANAGEMENT DUTIES
It is the duty of the directors to manage the company with care as soon as company formation has taken place.
This generally means that all decisions and actions made after setting up a company should be taken that benefit the company.
COMPLIANCE DUTIES
The directors are responsible for ensuring that compliance matters are dealt with both accurately and in a timely manner.
This includes such things as:
registering with the Information Commissioner
taking out insurance completing the Companies House annual
return maintaining the Company Register.
EMPLOYMENT DUTIES
A director is responsible for the employment of his/her staff.
This includes not only their contractual and statutory rights but also their general wellbeing and safety whilst at work.
DEALING WITH TAXATION
Directors are responsible for calculating and accounting for the tax that falls due after setting up a company - including:
PAYE NIC VAT Corporation Tax
Penalties and fines can be levied for errors and for fraudulent tax evasion this can lead to criminal action by the state.
INSOLVENCY
The directors are responsible for ensuring that the company registration is trading whilst solvent.
Once they know that the company is insolvent they can be committing a criminal offence.
The director has a duty to minimise the potential losses of creditors if the company is in financial trouble otherwise the director could be liable to prosecution.
A BIT ABOUT WISTERIA FORMATIONS...
W: http://www.wisteriaformations.co.uk
T: +44 (0)844 893 0808
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