A director is legally responsible for the representation, statutory records, financial management and accounting of the company. These responsibilities are clearly outlined and must be adhered to by law.
A director is responsible for the maintenance of the company's accounting records. Failure to keep proper accounting records is a criminal offence punishable by imprisonment or a fine. For persistent failure a director may be disqualified and the company could be liable to be struck off the Registrar's list of companies.
The accounting records must be sufficient to enable the directors to prepare accounts that provide a true and fair view of the company's affairs at a particular date. Late filing of accounts will result in the company being charged a penalty.
Please note that failure to deliver documents to Companies House is a criminal offence and all directors of the company risk prosecution that could lead to a criminal record and a fine of up to £5,000 for each offence. This is separate to the civil penalty imposed on the company for late filing of accounts.
Directors are legally required to keep specified registers, books and records that reflect the operation of the business. It is usually the company secretary’s primary responsibility, though it is also the responsibility of the director(s) to ensure they are maintained and kept up to date.
The records include: registers of members/company secretaries/directors and their service addresses, as well as minutes of meetings, resolutions recording decisions and accounting records.
There are particular requirements on where the various statutory registers and charges must be kept. From October 1st 2009, under the Companies Act 2006 s1136, they must be kept at either the company’s Registered Office address or single alternative inspection location (SAIL). Both of these addresses must be within the country of registration (i.e. England and Wales, or Scotland). Companies House require that if the registers are held at an alternative inspection address to the registered office address, that they are notified within 14 days by filing the appropriate form, an AD02, AD03 or AD04.
Failure to maintain the records or submit a return within the required timescales will result in the directors being liable to a fine.
Directors are at personal risk if the company is unable to pay its debts as and when they fall due or its liabilities exceed its assets. If a company is insolvent then any conduct contrary to protecting the interests of the company’s creditors will put the director at personal risk.
The director(s) must ensure that the company name is legible on all of its letters, notices, orders, invoices and all other company correspondence including cheques. A contract entered into by a director may not be binding on the company if they did not at the time make it clear they were acting on behalf of the company and, in such cases, the director may be personally liable for the transaction.
Directors' names are not required on business stationery however, if one director's name appears as part of the stationery then all the directors' names must be stated.
The company's name must be included in legible characters on:
- Business letters
- Notices and official publications
- Order forms
- Bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed on behalf of the company bills, invoices, receipts and letters of credit
- The company's website
In addition to the company name, the information set out below must be included on any official documents sent in the form of business letters and order forms. They must also be included on the company's website:
- The company's place of registration (e.g. England & Wales)
- The company number
- The registered office address
- The names of all the directors where the document includes the name of one director other than in the text of the document or as a signatory
These requirements apply equally to documents sent in hard copy and in electronic form.