Directors’ Duties: Understanding Your Legal Responsibilities

Mar 5, 2026 | Business Law Articles

Becoming a director of a UK company carries significant legal responsibilities under the Companies Act 2006.

These duties are owed to the company itself, not individual shareholders.

The Seven Statutory Directors’ Duties

Directors must:

1. Act within their powers

2. Promote the success of the company

3. Exercise independent judgment

4. Exercise reasonable care, skill and diligence

5. Avoid conflicts of interest

6. Not accept benefits from third parties

7. Declare interests in proposed transactions

These duties apply whether the company is small and owner-managed or a larger corporate entity.

Consequences of Breach

A breach can result in:

● Personal liability

● Repayment of profits

● Compensation claims

● Disqualification (up to 15 years)

● Wrongful trading claims if the company becomes insolvent

Directors must therefore understand their legal obligations before accepting appointment.

If you are appointing directors, reviewing governance structures, or require advice on compliance with the Companies Act 2006, we can assist.

As always, the team are here to help you. To get in touch just call us on 020 3740 2370 or email info@clearlybusinesslaw.co.uk