The role of a director in a company encompasses a range of responsibilities and duties primarily governed by the Companies Act 2006. Directors are responsible for the day-to-day management of the company, making decisions on behalf of the company to ensure its business operations continue smoothly. This includes decisions related to borrowing money, entering into contracts, employing staff, and acquiring assets. Directors are empowered to act on the company’s behalf through a combination of the company’s articles of association, statutory provisions, common law, and shareholder resolutions.

The duties of a director in England and Wales are primarily codified in the Companies Act 2006 (CA 2006), specifically in sections 171 to 177. These duties include both fiduciary and statutory obligations.

Directors must act in accordance with the company’s constitution and only exercise their powers for the purposes for which they are conferred. This is known as the duty to act within powers. Additionally, directors are required to act in a way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. This duty also requires directors to consider various factors such as the long-term consequences of their decisions, the interests of the company’s employees, and the impact of the company’s operations on the community and the environment.

Directors must exercise independent judgment, which means they should not simply follow the instructions of others without considering the best interests of the company. However, this duty does not prevent directors from relying on advice or delegating tasks where appropriate, as long as they make the final decision independently. Furthermore, directors are obligated to exercise reasonable care, skill, and diligence. This duty is both objective and subjective, requiring directors to meet the standard of a reasonably diligent person with both the general knowledge and the specific skills and experience they possess.

Another critical duty is to avoid conflicts of interest. Directors must not place themselves in situations where their personal interest’s conflict with those of the company. This includes not exploiting any property, information, or opportunity for personal gain without proper authorisation. Additionally, directors must not accept benefits from third parties that are conferred by reason of their being a director or their actions as a director, unless such acceptance is authorised by the company.

Directors have a duty to declare any interest in a proposed transaction or arrangement with the company. They must disclose the nature and extent of their interest to the other directors.

These duties are designed to ensure that directors act in the best interests of the company and its members, maintaining high standards of corporate governance and accountability.

In short, none. A company director in England and Wales is not automatically entitled to remuneration or reimbursement of expenses solely by virtue of their office as a director. The entitlement to remuneration must be conferred by the company’s articles of association or through a contractual agreement with the company, such as a contract of employment.

Directors have no automatic entitlement to be paid anything but nonetheless have various strict statutory duties and obligations that they must adhere to or face the consequences of not doing so.

That said, they have control of the day to day running of a company and ‘direct’ its affairs.

Shareholders are not subject to the same duties and responsibilities as directors but yet are entitled to share in the profits of the company by way of dividends. They do not have the ability to manage or direct a company’s day-to-day operations.

A director of a company in England and Wales can be removed from office by an ordinary resolution (more than 50%) of the members passed at a general meeting, as stipulated under section 168 of the Companies Act 2006 (CA 2006).

There are various special requirements to pass such a resolution which should be considered. Further, it is important to note that removing someone as a director does not take away heir rights under a contract of employment or as a shareholder.

The appointment of a director can be achieved by way of the following:

• By resignation.
• Under the company’s articles.
• By operation of law.
• By ordinary resolution under section 168 of the Companies Act 2006 (CA 2006).
• Under contract, such as a provision in a service agreement requiring the director to resign.
• By court order.
• By the death of an individual director.

It should be noted that the above will not release a company from any obligations it has to a director by way of service contract or employment contract or similar.

Under the Companies Act 2006, a private company in England and Wales must have at least one director, while a public company must have at least two directors. However, the articles of association of a company may stipulate a higher minimum number of directors. It is also important to note that every company must have at least one director who is a natural person.