What are a company director's actual legal duties?

In the UK, seven duties are set out in statute — the Companies Act 2006 — and they apply to every director of every company, including a sole director of a small one who may never have read them.

The seven general duties:

To act within powers — in accordance with the company's constitution, and using powers for their proper purpose.

To promote the success of the company for the benefit of the members as a whole. In doing so, a director must have regard to the likely long-term consequences, employees' interests, relationships with suppliers and customers, the impact on the community and environment, the company's reputation, and the need to act fairly between members. This is sometimes called "enlightened shareholder value", and the list is a statutory requirement rather than good practice.

To exercise independent judgement — you cannot simply do what a shareholder or appointer instructs.

To exercise reasonable care, skill and diligence. Judged on a dual test: the objective standard of a reasonably diligent person carrying out that role, and the director's own actual knowledge and experience. A qualified accountant is held to a higher standard than someone without that background.

To avoid conflicts of interest.

Not to accept benefits from third parties.

To declare interests in proposed transactions with the company.

What people get wrong:

Duties are owed to the company, not to individual shareholders — which is why a minority shareholder's complaint is not automatically a breach of duty.

"Shadow directors" and "de facto directors" are caught too. Someone who acts as a director without being appointed, or on whose instructions the board is accustomed to act, carries the duties. Being called an adviser does not avoid them.

The duty shifts when insolvency looms. Once insolvency becomes probable, directors must have regard to creditors' interests — a point confirmed by the Supreme Court — and this changes the calculus entirely at exactly the moment directors are most tempted to trade on.

Administrative duties sit alongside: filing accounts and confirmation statements, maintaining registers, and keeping adequate accounting records.

Disqualification for up to fifteen years is the principal sanction.

General information, not legal advice.