Directors and their general duties
10 September 2017
English law imposes on company directors high standards of behaviour and they must put the interests of the company before their own. Their duties are derived from both statute and case law. In addition to general duties, there are extensive specific duties. This is an introductory guide to those general duties.
Who is a director?
The Companies Act 2006 (CA2006) defines a "director" to include any person occupying the position of director, by whatever name called (section 250 CA2006).A person who is formally appointed as a director will be a director. In addition, someone who is acting as a director without having been formally appointed (called a de facto director) will also, generally, come within this definition.
Are there any qualifications for being a director?
Currently both companies and individuals can be directors
There are very few circumstances in which a person may not be appointed as a director:
- the person must not have been disqualified by a court from acting as a company director (unless a court has given him or her permission in relation to a particular company);
- the person must not be an undischarged bankrupt (except with leave of the court);
- the person must not be under the age of 16;
- a company must have at least one director who is a natural person; and
- a company's articles may set requirements. For example, a director may be required to hold a certain number of the company's shares.
The Government intends to introduce a prohibition on appointing corporate directors. It has not yet announced the expected date nor has it published the limited exceptions.
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