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Director Duties

You need a licence to drive


It is often said, to drive a vehicle on the roads you first need to pass a test, which demonstrates you understand the laws of the road.  You also receive a driving licence as evidence of passing.  This goes with many professions where you need to achieve certain qualifications and probably receive a certificate as evidence.  However, to be a director of a company, it is a simple case of filling in a form and filing that at Companies House with no question of whether you understand the statutory burden that office imposes.


As an employee you will either gain knowledge or acquire qualifications and you are employed for that service under a contract of employment.  However, add the label of “Director” to that employment and you immediately become a company officer that carries duties beyond a simple employment contract.


The principal duties of a director are laid down in the Companies Act 2006 and generally state a director shall:


  • Act within their powers
  • Promote the success of the company
  • Exercise independent judgment
  • Exercise reasonable care, skill and diligence
  • Avoid conflicts of interest.


In most cases, the true implications of these duties may never consciously arise.  But what if your company is experiencing financial difficulties?  All too often directors ask can I pay this person, or can I repay a loan where I have given a personal guarantee?  Alternatively, directors may decide to continue trading in the hope that something good is around the corner.  Unfortunately, it is often something that is far from good that awaits around that corner and that can occasionally lead to personal liability and/or director disqualification.


In any circumstances where a company requires restructuring or, is facing closure, it is always the directors who are at the end of the criticism, whether that is from The Insolvency Service or creditors who face debt write off.  It can be of little surprise that directors who have taken advice from an early stage and follow that advice find the criticism (and other ramifications) minimised, or even extinguished.


Should you have an issue of financial difficulties then please contact a member of the Team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to or access our website at