When you form a limited company, two key roles need to be filled by at least one person in order for the company to be created – a shareholder and a director. Both roles in the company have their individual requirements and responsibilities but these are very different from one another.
Here we look at the two different roles and what it means to be one or the other for a limited company:
Being a Company Director
The role of company director might sound like an impressive title to hold and it certainly looks good on your C.V. but it isn’t a title without any duties. In fact, the company director has the most responsibilities within a limited company and for this reason, you must be at least 16 years old before taking up the role, as well as not having previously been disqualified from taking such a role.
To become a director you must not be currently in bankruptcy, unless the court has given permission for you take the role and must not face any government restrictions. Lastly, you must not have been restrained by a court from becoming a company director.
Company Director responsibilities
Assuming you fulfil the above requirements, then you can become a company director without hesitation. If you take up the role, then you will have the following responsibilities:
- Ensuring that any information requested by Companies House is provided, such as annual accounts and tax returns
- Act within the rules laid out by the Articles of Association
- Answer to the shareholders of the company
- Promote the success of the business
- Act with diligence, care and skill in all of the business dealings
- Avoid or declare any conflict of interest
- Look after health and safety of employees of the company
- Organise any credit and enter credit agreements on behalf of the company
- Investing financially in the business (at least £1 to be a shareholder)
- Receive a portion of profits relating to their shares
- Contributing to any company debt in proportion to their shares
- Helping choose a director and deciding on director’s powers as well as their salary
- Authorising the transfer of shares
- Names of all the shareholders in a company are part of the public record along with a contact address, though the shareholder can appoint a nominee if they wish to keep their personal details off the public record.
- Shareholder agreement