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What Are Your Rights as a Director of a Company?

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Putting up a company entails a lot of responsibilities. It’s not easy to run a business, especially if the roles of the key people behind it are not clearly defined. If you happen to be the company director, what are your duties and responsibilities? This article will tell you what you need to know and inform you of your rights and obligations.

Who is a Director?

First, let’s define what a director is. To put it simply, that person manages the affairs of the company. All companies have at least one director. That individual is usually appointed and can either be a “de facto director” or a “shadow director” in which the other directors and staff follow your instructions.

Your Rights as a Director of a Company!

  • The right to access the company’s documents and financial records. As a director, you can inspect the company’s books and accounts,
  • The right to delegate. A director can delegate any of their powers to another person, provided this is recorded in the company’s minute book and does not violate its constitution.
  • The right to participate in board meetings and decisions. This is usually stated in the company’s constitution.
  • The right to remain in office until that person is removed. A company’s constitution also states how a director is removed, either by a majority vote of the other directors or by a resolution.

What are the Director’s Duties & Responsibilities in a Company?

As expected, the duties and responsibilities of company directors are varied. That person is expected to perform the following:

  • The duty to act with care and diligence. This is expected if the director is concerned about the company and its shareholders.
  • The duty to act in good faith. A director must work for the company's best interests and look after the welfare of the company’s shareholders.
  • The duty to disclose interests. If the director has a material personal interest in company affairs, he must inform other directors about this.
  • The duty to exercise powers for a proper purpose like raising capital for the company.
  • The duty is not to improperly use position or information. A good director must not abuse his power or position or use information about the company to his advantage.
  • The duty not to trade while insolvent. A responsible director must ensure that the company does not trade if it is insolvent or can’t pay its debts.

What if a Director is Fail to Complete his Responsibilities and Duties?

Directors who fail to do their duties well risk suffering from serious consequences. If found guilty, they can be criminally charged and imprisoned for five years or fined up to $200,000. They may be disqualified from managing any company in the future. In some cases, erring directors may be held personally liable for company losses.

Many are unaware that being a “de facto” or “shadow director” gives them the same duties as validly appointed directors. This misunderstanding can cause problems later, especially if they don’t know this. Failing to disclose conflicts of interest is another common problem that directors may face. Directors must also take steps to monitor the company’s solvency, cash flow, and debts or risk being liable for future debts.

If you are confused about your rights and responsibilities as a company director, get in touch with the friendly lawyers of Deo Volente (DV) Solicitors in Bedford, UK. We will gladly provide you with the information you need so you can act accordingly. Don’t hesitate to call us for clarification. We are here to help.

For more information, visit dvsolicitors.com, call 01234 350 244, or email [email protected].


DV Solicitors

DV Solicitor, a leading law firm in Bedford & London, offers a wide range of legal services including commercial property, corporate, employment, personal injury and human rights/immigration law. Known for their expertise and client-focused approach.
By: DV Solicitors
Date: November 6, 2022

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