Many become directors for one reason and one reason only - to save on their tax bill via the ‘salary/dividend’ method. Jennifer Adams offers some advice to help directors get the details right.
However, what those directors might not appreciate is that the role requires them to undertake specific legal duties; the penalties for non-compliance can be severe to include possible criminal proceedings.
This checklist is intended to form the basis of a list that can be given to all directors for their reference; if the reader is aware of additional legal duties please feel free to append.
- Prime Duty
Directors hold a position of trust on behalf of the company’s shareholders. Their prime duty is to manage the company for the benefit of those shareholders and not for any individual shareholder or group of shareholders.
- Statutory Duties
As with many UK legal rules the duties owed by directors derive from Common Law having evolved as a result of different rulings, comments and decisions made in Court Cases over the years. The Companies Act 2006 ‘codified’ (brought together) some of those rulings with particular relevance to ‘conflicts of interest’ such that there are now seven statutory duties as follows: S172 – s177 Companies Act 2006.