Director Duties: What You Need to Know.
07 August 2025
As a company director, it is vital that you understand your duties and responsibilities as you have a direct responsibility for your company’s performance.
If you fail to meet your duties and responsibilities and your company becomes insolvent, the insolvency office holders (the administrators and liquidators) have a legal duty to pursue you for certain claims to help pay your company’s creditors.
The Companies Act 2006 identifies seven statutory duties for company directors:
(1) Stick to the Company's Constitution
To act in accordance with the Company’s constitution (which includes the company’s Articles of Association and certain other resolutions and agreements to which Part 10 of the Companies Act applies) and to only exercise such powers for their proper purpose.
In short: Play by the company's rules and use your power wisely and fairly.
(2) Work for the Company's Success
To act in a way you consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole.
In short: Always aim for the company's long-term success, keeping everyone connected to it in mind.
(3) Think for Yourself
To exercise independent judgement. This includes when delegating certain matters or choosing to follow specialist advice.
In short: Don't just follow blindly; form your own informed opinion.
(4) Act with Reasonable Care, Skill, and Diligence
To exercise the care, skill, and diligence which would be exercised by a reasonably diligent person with both 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 actually has.
In short: Be competent, responsible, and apply common sense to your role. Don't be negligent.
(5) Avoid Conflicts of Interest
To avoid situations where there is a direct or indirect interest of theirs that conflicts with, or may conflict with, the interests of the company.
In short: Don't put yourself in a position where your personal interests could come before the company's best interest.
(6) No Secret Benefits from Third Parties
To refuse any benefit (e.g. a bribe or secret commission) from a third party which is conferred because of being a director or doing or not doing anything as a director.
In short: No bribes, no kickbacks. Your decisions must be unbiased.
(7) Declare Your Interests in Proposed Company Deals
To declare any direct or indirect interest in a proposed transaction or arrangement with the company to the other directors and give full and frank disclosure.
In short: Be open and honest about any personal connection you have to deals the company is considering.
Other statutory duties
In addition to the seven main duties listed above, if you’re a company director you have other duties you are legally required to adhere to. These duties generally relate to the keeping and submission of records and legal documents but also include ensuring that the company complies with its legal obligations relating to the health, safety, and welfare of its workers while at work and environmental legalisation.
There are also a number of non-statutory duties to which you are subject, including the so called ‘Creditor Duty’.
A director’s duties continue when a company enters an insolvency process. Resigning as a director shortly before or during an insolvency process does not relieve you from your duties and responsibilities.
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