Company Officers

The official roles of company officers

All private limited companies have to have a company director and a company secretary. So who can become one? What do they have to do? And what happens if they don't do it.

The basics

You do not have to be called a director to be covered by the legal rules on directorship. Often in a small company there may be no formal agreement as to your title, but if you attend and vote at a board meeting, even if it is on a director's behalf, the law regards you as a director of the company. It helps to avoid misunderstandings if people have formally agreed titles.

As company director you are expected to do your reasonable best for that company.

You also owe your company fiduciary duties, so you must always act honestly and with the best interests of the company at heart.

If you have a specific professional qualification, you are expected to have higher standards when you are employed in that area than someone who is not qualified. For example, if you qualified as an accountant you would be expected to have a better understanding of the company's finances than a personnel director.

You can hold directorships of more than one company.

Who can be a company director?

It is up to the members (owners or shareholders) of a company to appoint the people they believe will run the company well on their behalf. They can choose who they like unless they are an undercharged bankrupt; have been disqualified from acting as a company director by a court; or, in Scotland, are under 16.

Key responsibilities

The key responsibilities of a company director are to ensure that the statutory documents are delivered to the Companies House Registrar and when required by law.

These documents include:

Accounts

Annual returns

Notice of change of directors or secretaries or their particulars such as residential address

Notice of change of registered office

If accounts or annual returns are not filed, a director could end up with a criminal record and a fine of up to £5000 for each offence. Alternatively, the Registrar could strike the company off the register and dissolve it. If this happens all the company assets become the property of the Crown.

On average more than 1000 directors are prosecuted each year for failing to deliver accounts and returns to the Registrar on time. Persistent failure can lead to a director being disqualified from taking part in the management of the company for a specified period.

You normally have 10 months from the accounting reference date to deliver your company's accounts to the registrar. If they are received late you will pay a late-filing penalty of up to £1000.