A director is an individual elected or appointed to oversee a company’s affairs. The responsibilities of a director include making strategic decisions, managing operations, overseeing finances, and ensuring legal compliance. Anyone legally allowed to work where the company is registered can be a director. Directors often receive compensation.
Statutory Duties of Directors
The Companies Act 2006 defines 7 general statutory duties for company directors:
- Act within powers per the company’s articles of association
- Promote the company’s success
- Exercise independent judgment
- Exercise reasonable care, skill and diligence
- Avoid conflicts of interest
- Not accept benefits from third parties
- Declare interest in proposed company transactions
The role requires understanding and complying with laws, establishing ethical standards, and building trust with stakeholders to safeguard the company’s reputation. To become a director, individuals typically need a business degree and management experience.
Board Composition and Requirements
All companies must have at least two directors, with more allowed up to a maximum of fifteen. Only individuals can become directors after receiving a Director Identification Number. Ability to communicate company goals and strategies effectively is important. Companies may require additional qualifications like professional experience.
Personal investments, advisory positions, and potential to profit from the role can create conflicts of interest. Appointed by shareholders, directors manage finances and functions. They are responsible to members. Directors control company affairs and work towards its goals.
Ideal directors add value through ideas, management, and leadership. Shareholders with these abilities can be offered directorship. Investors should carefully consider whether they can contribute rather than seeing it as an offer.
Considerations for Shareholders
Who is considered a director of a company?
A director participates in meetings, makes decisions, and ensures obligations met. Termed the will of the company, they control its actions. Ability to communicate company goals and strategies is important. Companies require additional qualifications like professional experience.