What Does a Company Director Do?

A company director manages the company's business, makes strategic decisions, and has legal duties to act in the company's best interests.

Last reviewed: 12 June 2026 | Reading time: 5 minutes | Verified against 5 sources

The Director's Role

A director is appointed to manage the company's business activities. In small companies, you're typically both director and shareholder, meaning you both own and run the business.¹

Directors collectively form the board, which:

• Sets strategic direction
• Makes major business decisions
• Ensures the company meets its legal obligations
• Oversees financial management
• Appoints senior staff (in larger companies)

In a micro company with one director-shareholder, you make all decisions yourself. In larger companies, directors work as a team and vote on major decisions.

Statutory Duties (Companies Act 2006)

Every UK director has seven legal duties codified in sections 171-177 of the Companies Act 2006:²

1. Act Within Powers

Follow the company's constitution (articles of association) and use your powers for their proper purpose. You cannot act outside the scope granted by the company's articles or shareholder resolutions.

2. Promote the Success of the Company

Act in good faith to promote the company's success for the benefit of shareholders as a whole. Consider long-term consequences, employee interests, supplier relationships, community impact, and the company's reputation.³

3. Exercise Independent Judgment

Make your own decisions rather than simply following others. You can take advice, but must form your own view.

4. Exercise Reasonable Care, Skill, and Diligence

Apply the care and skill that a reasonably diligent person would exercise in your position. Higher standards apply if you have specialist knowledge (e.g., qualified accountant).

5. Avoid Conflicts of Interest

Don't place yourself in a position where your personal interests conflict with the company's interests. Declare potential conflicts to other directors.⁴

6. Not Accept Benefits from Third Parties

Don't accept benefits (gifts, payments, services) from third parties that might create a conflict or compromise your independence.

7. Declare Interest in Proposed Transactions

If the company proposes a transaction in which you have a personal interest, declare this to the board before the transaction proceeds.

Minimum directors required

One for private limited companies

Who appoints directors?

Shareholders (or existing directors between AGMs)

Minimum age

16 years old (no maximum age)

Can director also be shareholder?

Yes (very common in small companies)

Day-to-Day Responsibilities

Beyond strategic duties, directors handle operational tasks:⁵

Financial Management

• Maintain accurate accounting records
• Prepare annual accounts
• File accounts with Companies House (within 9 months of year end)
• Submit Corporation Tax return to HMRC
• Ensure the company can pay its debts as they fall due

Compliance and Filing

• File confirmation statement annually (£13 fee)
• Notify Companies House of changes (directors, registered office, share capital)
• Maintain statutory registers (directors, shareholders, PSCs)
• Keep minutes of board meetings and resolutions

Employment and Contracts

• Enter contracts on the company's behalf
• Hire and manage staff
• Ensure workplace health and safety compliance
• Handle PAYE and payroll (if employing staff)

Strategic Responsibilities

Directors make high-level decisions that shape the company's future:

• Business planning and setting objectives
• Major investment decisions
• Entering significant contracts or partnerships
• Issuing or transferring shares
• Declaring dividends (subject to profit availability)
• Appointing or removing other directors
• Changing the company's articles of association (with shareholder approval)

Fiduciary Duties

Directors are in a fiduciary position, meaning you must act in the company's interests, not your own. This means:

• Loyalty: Put the company's interests first
• No secret profits: Don't profit personally from your position without disclosure
• Avoid self-dealing: Transactions with the company must be fair and disclosed
• Confidentiality: Don't misuse company information

Breach of fiduciary duty can result in personal liability, requirement to account for profits, or removal as director.²

Personal Liability Risks

Limited liability generally protects directors, but you can be held personally liable in specific situations:

Wrongful Trading

If you continue trading when you know (or should know) the company cannot avoid insolvent liquidation, you can be ordered to contribute personally to company debts.⁴

Fraudulent Trading

Trading with intent to defraud creditors is a criminal offence. You face unlimited personal liability and potential prison sentence.

Breach of Duties

Breaching statutory or fiduciary duties can result in court orders to compensate the company or pay back unauthorized profits.

Personal Guarantees

Many directors give personal guarantees for company loans, rent, or supplier credit. If the company defaults, you're personally liable for the debt.

Tax Obligations

Directors can be held personally liable if the company fails to pay PAYE, VAT, or Corporation Tax and HMRC believes you were responsible for the non-payment.

Director vs Shareholder

Directors and shareholders have different roles (though often the same person in small companies):

• Directors run the business, make day-to-day decisions, have legal duties
• Shareholders own the business, receive dividends, vote on major changes

See our director vs shareholder comparison for detailed differences.

Appointment and Removal

Becoming a Director

You're appointed by:

• Shareholders passing an ordinary resolution
• Existing directors (if articles permit)
• Named as first director when forming the company

Once appointed, you must be registered with Companies House using form AP01.

Leaving the Role

Directors can resign, be removed by shareholders (ordinary resolution), or be disqualified by court order. Notice must be filed with Companies House using form TM01.

When Setting Up a Company

If you're forming a limited company, you'll typically appoint yourself as the first director. The process is covered in our guide on how to set up a limited company.

Last reviewed: 12 June 2026