UK Company Director Responsibilities & Legal Duties 2026

When you become a director of a UK limited company, you take on a set of legal duties that exist regardless of where you live or how large the company is. These seven statutory duties — codified in the Companies Act 2006 — are owed to the company itself. Failing to meet them can result in personal liability, disqualification, and in serious cases criminal prosecution.

1. Act Within Powers (s.171)

A director must act in accordance with the company's constitution (its Articles of Association) and only exercise powers for their proper purpose. The Articles define what a director is authorised to do on behalf of the company. Acting outside those powers — for example, transferring company assets for a personal purpose — is a breach of this duty.

Most UK private companies use the Model Articles of Association prescribed by the Companies Act, which give directors broad management powers. If your company has customised Articles, review them to understand the limits of your authority.

2. Promote the Success of the Company (s.172)

This is the most broadly applicable duty. A director must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so, the director must have regard (among other matters) to:

• The likely consequences of any decision in the long term
• The interests of employees
• The need to foster business relationships with suppliers, customers and others
• The impact of the company's operations on the community and the environment
• The desirability of maintaining a reputation for high standards of business conduct
• The need to act fairly between members of the company

Note: when a company is insolvent or near insolvency, this duty shifts — directors must then prioritise the interests of creditors over shareholders.

3. Exercise Independent Judgment (s.173)

A director must not allow their discretion to be fettered by binding themselves to vote a particular way in advance, or by allowing others to control their decision-making. You can take advice and follow recommendations, but you must exercise your own judgment when making decisions. This duty is not violated by acting in accordance with a shareholders' agreement or following the company's constitution.

4. Exercise Reasonable Care, Skill and Diligence (s.174)

Directors are expected to perform their functions with the care, skill and diligence of a reasonably diligent person who:

• Has the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions (objective test), and
• Has the actual knowledge, skill and experience of that particular director (subjective test — whichever sets the higher bar)

In practice this means: a director who is an accountant by profession is held to a higher standard on financial matters than a non-accountant. Delegating tasks is permitted, but directors retain responsibility for proper supervision and monitoring.

5. Avoid Conflicts of Interest (s.175)

Directors must avoid situations where they have, or could have, a direct or indirect interest that conflicts with the company's interests. This covers conflicts arising from property, information, or opportunities — not just financial interests. Common examples include:

• Using a business opportunity that came to your attention through your role as director for personal benefit
• Holding a directorship in a competitor company
• Receiving personal benefit from a supplier relationship

The company's shareholders (by resolution) or a board of independent directors can authorise a specific conflict — but this must be done proactively, not retrospectively.

6. Not Accept Benefits from Third Parties (s.176)

Directors must not accept benefits from third parties (other than the company itself) conferred by reason of their position as director, or by doing or not doing anything as a director. This extends the conflict of interest duty to gifts and hospitality. A benefit is acceptable only if it cannot reasonably be regarded as giving rise to a conflict of interest — most companies set a de minimis threshold in their policies (typically £25–£50 for gifts).

7. Declare Interest in Proposed Transactions (s.177)

If a director is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, they must declare the nature and extent of that interest to the other directors before the company enters into the transaction. This applies even in a sole-director company — the declaration should be in the board minutes. Failure to declare is a criminal offence under s.182.

What Happens if You Breach a Duty?

The consequences of breaching a director's duty depend on severity:

Breach	Potential Consequence
Profiting from a conflict of interest	Account of profits to company; transaction set aside
Causing loss through negligence	Personal liability to compensate the company
Wrongful trading (insolvent company)	Personal liability for company's debts (Insolvency Act 1986)
Fraudulent trading	Criminal prosecution; unlimited personal liability
Persistent breach of filing obligations	Director disqualification (up to 15 years)

Additional Obligations Beyond the Seven Duties

The Companies Act 2006 duties are the core, but directors also have additional statutory obligations:

• File annual confirmation statement at Companies House (within 14 days of review date)
• File annual accounts at Companies House (within 9 months of accounting period end for private companies)
• File corporation tax return (CT600) with HMRC (within 12 months of accounting period end)
• Maintain statutory registers: Register of members, directors, PSCs, and charges
• Register PSCs (People with Significant Control) and report changes to Companies House
• Notify Companies House of any changes to the company: new directors, registered office address, share structure

Further reading: Director Pay for Non-Residents: Salary vs Dividends Guide.

Frequently Asked Questions