1. Act within powers
Follow the company's constitution and use powers only for the purposes for which they were given.
Responsibilities
A nominee director has ordinary director duties.
A private agreement can allocate day-to-day tasks, but it cannot turn a director into a name on paper or transfer away independent judgement and reasonable oversight.
Companies Act 2006
The seven general duties.
2. Promote the company's success
Act in good faith for the benefit of members as a whole while considering the factors listed in section 172. Creditor interests become increasingly important when insolvency is likely.
3. Exercise independent judgement
Consider advice and proper delegations, but do not simply follow a nominator, owner or other person's instructions.
4. Use reasonable care, skill and diligence
Apply both the objective standard expected of a director and the knowledge, skill and experience you actually have.
5. Avoid conflicts of interest
Identify and deal properly with situations in which personal or third-party interests may conflict with the company's interests.
6. Do not accept improper benefits
Do not accept a benefit from a third party because you are a director, or because of something you do or do not do as director.
7. Declare interests
Disclose the nature and extent of an interest in a proposed transaction or arrangement as required.
Oversight cannot be switched off.
- Obtain enough information to understand the company's activity, finances and material decisions.
- Read documents before approving or signing them and record questions, objections and decisions.
- Maintain a reasonable system for accounts, confirmation statements, tax, payroll and event-driven filings, even where administration is delegated.
- Identify the beneficial owner, PSC and any person exercising real influence; do not help hide control.
- Escalate unexplained transactions, secrecy requests, false information or pressure to surrender access or authentication codes.
Public office and personal consequences.
- Core appointment information is generally public on the Companies House register.
- Director fees paid directly for holding the office are generally employment income and normally handled through PAYE by the company in which the office is held.
- Employment, professional, benefit, immigration, pension, insurance and credit consequences depend on individual facts and separate rules.
- Resignation does not erase the public history or liabilities arising while in office.
Financial distress changes the focus.
When a company is or may become insolvent, directors should give greater weight to creditors' interests, protect assets and records, avoid worsening creditor losses and obtain qualified insolvency advice promptly. Company failure does not automatically prove wrongdoing, but inaction can increase exposure.
Read the insolvency decision guideIndemnity and insurance have limits.
Companies Act 2006 sections 232–235 restrict attempts to exempt or indemnify directors. A lawful indemnity or D&O policy may respond to defined costs or claims, but coverage depends on the actual wording, exclusions, limits, notification terms and the payer's ability to perform.
Do not assume that any document removes duties, prevents an investigation or covers fines, fraud, dishonesty or every personal loss.