Company Directors – Be Aware of the Companies Act 2006

Directors Duties Company Act 2006

Companies Act 2006 and Cato Solicitors

Here at Cato Solicitors, we are no strangers to working with Company Directors and many we have spoken to believe they are the company and the company is them, considering themselves to be the “owner.” Although commendable, this is not the case in law.

In law, a company is considered a separate legal “person” and can do things as any other “person” does, such as:

  • Enter into agreements
  • Bring court proceedings
  • Own property

The Company Directors Duties – Companies Act 2006

Directors have a “fiduciary” relationship with a company. “Fiduciary” means a special relationship of trust. For example, looking after the savings of an elderly parent, making sure the money is only spent on their best interests.

So a good way of relating to the duties of a Director is to imagine the company you “own” is like a disabled relative whose finances and business you manage because they are unable to do it themselves.

In a broad sense the statutory rules are based on this understanding, and the relevant sections in the Companies Act 2006 say that Directors must:

171: act within their powers
172: promote the success of the company
173: exercise independent judgement
174: exercise reasonable care, skill and diligence
175: avoid conflicts of interest
176: not accept benefits from third parties
177: declare an interest in any proposed transaction or arrangement with the company

So: take great pride in what you do, but be mindful of how you carry it out!


Need assistance with Directors Liability? Here at Cato Solicitors we provide expert Corporate Crime and Criminal Allegations assistance. See how we can help you today.

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