1. DUTIES OF A DIRECTOR OF A NEWLY
SET UP COMPANY
We outline the code of conduct for directors of private
limited companies following company formation.
2. A director of a new company registration has a wide
range of important duties after setting up a company
and as such it is important that any newly appointed
director is aware of them.
This presentation highlights the duties involved for
new directors and also gives advice as to how to
avoid being in breach of these duties.
3. GENERAL DUTIES
Acting within their authority as directors
Acting in a way which promotes the interest of the
new company formation
Exercising reasonable care, skill and diligence
4. CONSTITUTIONAL AND CONTRACTUAL
DUTIES
Directors have a duty to act in accordance with any
constitutional or contractual agreements.
Examples of these include:
Memorandum of Association
Articles of Association
Shareholder Agreements
Employment Agreements
Service Agreements
Staff Handbooks
Board Resolutions
5. DUTY TO EXERCISE INDEPENDENT JUDGMENT
Broadly this means that directors cannot allow
others to influence their decisions or to make
decisions for them.
A director will not breach this duty if they:
act in accordance with an agreement entered into
by the newly set up company which restricts the
exercise of the directors’ discretion
act in a way authorised by the companies’
constitution
rely on the advice or work of others in making their
decisions
6. DUTY TO AVOID CONFLICTS OF INTEREST
Directors have a duty to avoid conflicts of interest
after they register a company.
Where one may arise they will need to disclose this
to non-conflicted directors and allow them to make
the decision regarding the relevant transaction.
7. DUTY NOT TO ACCEPT BENEFITS FROM THIRD
PARTIES
Directors must not accept benefits from third parties
for being a director.
However they will not be in breach of this duty if the
acceptance of such benefit cannot reasonably be
regarded as likely to give rise to a conflict of
interest.
8. FIDUCIARY DUTIES
Directors have a duty in law to act in good faith for
the best interest of the company after it has taken
part in the company registration process.
This includes a duty to:
Act properly
Not make secret profits
Avoid conflicts of interest.
9. MANAGEMENT DUTIES
It is the duty of the directors to manage
the company with care as soon as
company formation has taken place.
This generally means that all decisions
and actions made after setting up a
company should be taken that benefit the
company.
10. COMPLIANCE DUTIES
The directors are responsible for ensuring that
compliance matters are dealt with both accurately
and in a timely manner.
This includes such things as:
registering with the Information Commissioner
taking out insurance
completing the Companies House annual return
maintaining the Company Register.
11. EMPLOYMENT DUTIES
A director is responsible for the
employment of his/her staff.
This includes not only their
contractual and statutory rights but
also their general wellbeing and
safety whilst at work.
12. DEALING WITH TAXATION
Directors are responsible for calculating and
accounting for the tax that falls due after setting up a
company - including:
PAYE
NIC
VAT
Corporation Tax
Penalties and fines can be levied for errors and for
fraudulent tax evasion this can lead to criminal action
by the state.
13. INSOLVENCY
The directors are responsible for ensuring that the
company registration is trading whilst solvent.
Once they know that the company is insolvent they
can be committing a criminal offence.
The director has a duty to minimise the potential
losses of creditors if the company is in financial
trouble otherwise the director could be liable to
prosecution.
14. W: http://www.wisteriaformations.co.uk
@: formations@wisteria.co.uk
T: +44 (0)844 893 0808
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