Lawrence Stephens

Directors’ Duties and Liabilities

Company directors must comply with the provisions of the Companies Act 2006.  Failure to comply with directors’ duties can result in legal action, potential disqualification as a director, and personal liability for losses.  In dealing with these complexities, we advise businesses on how to remain fully compliant.

We represent company directors in businesses of every size, advising on regulations, correct procedures and managing recording and reporting requirements.  We also deal with alleged breaches of directors’ duties.

The Companies Act requires directors to:
  • Act within their powers
  • Avoid conflicts of interest
  • Declare any personal interest in a transaction
  • Exercise independent judgment
  • Exercise reasonable care, skill and diligence
  • Not to accept benefits from third parties
  • Promote the company’s success

Directors must maintain proper records, file appropriate information with Companies House and produce company accounts.  They also have responsibilities in respect of financial regulation compliance, solvency, and health and safety laws.

Breach of directors’ duties

Failure to comply with their duties can have serious consequences for directors – at worst, imprisonment and financial penalties for breaches which are classed as criminal offences.  When their company suffers losses, they may also be personally liable for substantial damages.

Advice and representation

We advise clients on complex compliance issues, including conflicts of interest, interest in a proposed business transaction and accepting benefits.  In areas that can be difficult to navigate, our team ensures that they do not act beyond their powers.

Our Employment team also represents directors facing allegations of misconduct or potential disqualification.