The role of the director is paramount to the success of any business. The directors of a company will initially be appointed by the shareholders, and will ensue responsibility for the day to day running of the business. The shareholders of a company are normally entitled to appoint one director, and their choice of one director usually includes the right for them to appoint themselves. The allowance to appoint one director will normally be defined in the company’s articles of association, or any relevant shareholder’s agreement that may be in place can also include this provision. Both these documents would ideally be drafted by the same corporate solicitor, this will usually afford the most continuity and ensures one clear point of contact for the business.
The role of the director should be defined in detail within the company’s articles; however, some directors of a company may also be employees, so their employment contract may also contain certain provisions which scope out their obligations and responsibilities in the business. Directors are governed by the company’s articles, but there are also several restrictions placed upon them which can be found in legislation, including in the Companies Act 2006. The directors together will make up the board. In the articles of the company it may provide that certain decisions can only be surpassed with board approval, or it may name one director i.e. the managing director who is granted extensive directorial powers to make certain decisions. Every director of a business will be under an obligation to conform with certain duties; it is worth noting that these duties are not owed to the shareholders themselves but to the company. Some of these duties are provided for in the Companies Act 2006 and include the duty to;
It is crucial that any director excercise his responsibilities carefully as the penalties for failing to do so are often high and unforgiving. Even if the company in question is a limited liability company, a director can sometimes be held personally responsible for losses that arise through acts or omissions. These acts or omissions could include unlawful trading, or a director acting outside the scope of his powers. Directors can be held personally liable in these circumstances, or can be held jointly and severally liable if the failing was found to be the result of the actions of the directors collectively. Summerfield Browne Solicitors are specialists in commercial and corporate law. Summerfield Browne have offices in London, Birmingham, Cambridge, Oxford, Northampton and Market Harborough, Leicester.
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