Directorships are often seen as lofty and important roles. Although there are plenty of ordinary business people who are company directors, these are roles that shouldn’t be taken lightly. If you’re thinking about becoming a company director, it’s a good idea to go into the role with your eyes wide open so you know exactly what’s expected of you.
What is a company director?
A company director is a man or a woman who plays a key role in the success of that company. Normally in their role for their specific skills, experience and judgement, company directors have a lot of responsibility resting on their shoulders. An integral part of making sure that the rules and regulations set out in the articles of association are adhered to, company directors are also responsible for making important company decisions. In addition to all of this, company directors need to make sure that all the administrative and financial responsibilities of the company are met and managed appropriately and correctly.
I’m setting up a limited company. Do I need a company director?
In order to set up a limited company, you must have a company director. In the past, you were required to have a company director and a company secretary, but since April 2008, the need for a company secretary has been removed. Where there is only one director, that director needs to be a ‘natural person’ and can’t be another company for example. Certain companies may have a requirement for more than one company director, but this will be outlined in their Articles of Association.
Do company directors have to be qualified?
Company directors are not required to have any formal qualifications in order to hold their directorship role. However, they are required to be over 16 years of age and can’t be banned from being a director or be an undischarged bankrupt. Clearly, it is in everyone’s interests for any person playing the role of company director that they take their responsibilities seriously as well as having sufficient knowledge about the business to add value.
What are their responsibilities?
While company director’s responsibilities vary from company to company depending on the number of directors, the size of the company and the role they play within the company, there are common responsibilities that apply to all directors. These include, but are not limited to:
- Being focused on making a success of the business.
- Making sure that the company adheres to its articles of association.
- Putting the company first, in relation to their actions and financial reward.
- Keeping company records up to date.
- Liaising with Companies House and HMRC if there are changes to the company.
- Keeping true and fair accounts and filing them and the Company Tax Return as required.
- Paying corporation tax.
Can I change company directors?
Changing company director is relatively easy, but isn’t something you’d necessarily want to do regularly. However, if you do decide to appoint a new director or end an arrangement you have with an existing director, you need to note the changes on the public records at Companies House. You can do this online.
If you are thinking of either becoming or taking on a company director and could do with some assistance, don’t hesitate to get in touch. At The Smart Contractor we can help you make sure that you go into this decision with your eyes wide open.