In recent times, company law has been thrust into the spotlight, with corporate governance facing closer scrutiny than ever. Whether navigating economic or geopolitical uncertainty, the rise of AI, or the latest Companies House reforms, the role of a company director has never carried greater responsibility. Yet many individuals remain unclear about what is expected of them once appointed to a company’s board.

This guide outlines the key duties imposed on UK company directors and practical steps to help directors remain compliant.

The role of a director

Directors are appointed by a company’s shareholders and are collectively responsible for managing the company’s day to day operations, strategy, legal compliance and long term direction.

Although directors are often also shareholders, the two roles are distinct. While shareholders may act in their own interests, directors must act in the best interests of the company. 

Because these roles can overlap, it is important for individuals to understand what it truly means to act as a director.

General duties of directors under the Companies Act 2006

The Companies Act 2006 (the “Act”) sets out a statutory framework of duties designed to promote integrity, accountability, and responsible stewardship. All company directors must comply with the following duties:

1. Act within powers

Directors must act only within the powers granted to them, whether those powers are set out in the company’s articles of association, a shareholders’ agreement, or any other governing document.

2. Promote the success of the company

Directors must act in good faith to promote the success of the company for the benefit of its shareholders as a whole. This includes considering the impact of decisions on shareholders and key stakeholders such as employees.

3. Exercise independent judgment

Directors must make decisions using their own judgment and should not simply follow the opinions of others without careful consideration.

4. Exercise reasonable care, skill and diligence

Directors must exercise the level of care, skill and diligence that would reasonably be expected of a person performing their role. This requires staying informed about the company’s affairs, having sufficient understanding of the business and continually developing relevant skills and knowledge.

5. Avoid conflicts of interest

Directors must avoid situations where their personal interests could conflict (directly or indirectly) with the interests of the company. Because some conflicts are subtle, it is best practice to disclose any potential issue early so the board can consider and authorise it if appropriate.

6. Not accept benefits from third parties

Directors must not accept benefits offered because of their position where doing so could improperly influence their decisions. Directors should assess all relevant circumstances before accepting any gift or hospitality.

7. Declare interests in proposed transactions or arrangements

If a director has any direct or indirect interest in a proposed transaction or arrangement with the company, they must disclose the nature and extent of that interest to the board. Depending on the company’s articles, they may also need to refrain from participating in decisions relating to that matter.

Other important duties to be aware of

Directors are responsible for ensuring that the company prepares and files annual accounts, completes all statutory filings on time and complies with reporting and disclosure obligations. 

Directors must also ensure compliance with wider areas of law, including health and safety, environmental, anti-corruption and bribery and insolvency rules (especially important if the company is in financial difficulty). 

Practical tips for directors

Taking these steps can help directors stay compliant:

• Governance & decision-making. Keep a clear record of any board decisions and the rationale behind them.
• Compliance & oversight. Familiarise yourself with the company’s constitution, monitor financial information regularly and ensure timely filing of company documents.
• Risk management. Disclose any potential conflicts of interest early, seek specialist advice from trusted advisers and apply independent judgment, even when under pressure.
• Legal advice. Seek early legal guidance when facing significant transactions, financial difficulty, or uncertainty around your duties. Professional advice can help you understand your obligations and ensure decisions are made with full awareness of their legal implications.

Crucially, directors owe their duties to the company, and a breach of those duties can expose a director to personal liability. Understanding and properly fulfilling these obligations is essential to ensuring strong governance and supporting the company’s long‑term success.

Ritchie Whyte is partner and head of corporate and business advisory at Aberdein Considine. David Millar is a solicitor in the firm’s corporate and business advisory team.