What’s a limited company director and what are their duties?

Welcome to the exciting world of running a limited company! 

Understanding your role as a company director isn’t nearly as complicated or scary as some of the dry documents out there make it sound.

Think of a company director as the captain of a ship. And just like every ship must have a captain, every limited company must have at least one director, responsible for steering the company in the right direction and making decisions that benefit the business.

Let’s dive into everything you need to know about the role of a limited company director, from your core responsibilities to how it differs from other roles, and even what you can expect in terms of salary.

Key takeaways: 

• Every limited company must have at least one director, and they must be over 16 years old
• A company director’s legal duties are defined by the Companies Act 2006, and are designed to make sure you always act in the best interests of the company
• The most common way to pay a company director is a small, tax-efficient salary combined with dividends
• All directors’ details are publicly accessible on Companies House

The simplest definition of a company director is a person who is legally appointed to manage a limited company’s strategic business decisions. This includes things like engaging with third parties and making sure the company stays on track to meet its financial and legal responsibilities. 

In the UK, every limited company is legally required to have at least one director. You can’t incorporate a company without one!

Generally, anyone over the age of 16 years old can be a company director, with a few restrictions:

• Disqualified directors: Individuals who’ve been legally disqualified by Companies House from acting as a director (which can last up to 15 years)
• Undischarged bankrupts: In most cases, if you’re an undischarged bankrupt, you cannot be a director unless granted permission by the court
• Under 16s: As mentioned, you must be at least 16 years old 

The terms “managing director” and “company director” are often used interchangeably, but the difference is actually quite simple.

• A company director is an individual who has been formally appointed and registered as a director, as per Companies House records
• Managing director is a role or title that might or might not be held by a company director

Let’s look at this difference in more detail:

Feature	Company director	Managing director
Legal status	An official company (“statutory”) role with legal duties and responsibilities (e.g. HMRC)	A role defined by the company, not legally required
Role	Primarily responsible for the legal and financial aspects of a company	Responsible for the day-to-day management and operations
Authority	Part of the board, with collective decision-making power	Typically reports to the board, with executive authority
Appointment	Registered with Companies House	Appointed by the board of directors

In practice, for most small to medium companies, the managing director is also a statutory director for clarity and authority but it remains a commercial choice, not a legal obligation.

The managing director typically takes on the most senior executive role, overseeing the daily operations of the business. Other company directors might have different departmental responsibilities, like finance or marketing.

In micro businesses, which are usually run by a single person, you’ll likely wear many director hats, including company director, managing director, CEO, head of marketing (and barista)!

Here’s where things start to get very legal and official. But don’t worry, we’re going to break it all down for you. 

Firstly, the duties and responsibilities of company directors are designed to make sure that you, as a company director, act with integrity and fairness. It’s all about protecting the company’s interests — above all else. 

Most of your day-to-day actions as a business owner will naturally align with these duties anyway. For context, your key legal duties stem from the Companies Act 2006, which sets out seven “statutory” (official, legally binding) duties that all directors must follow. Let’s look at them now. 

The seven statutory duties (you legal must-dos)

1. To act within powers

What it means: You must only act according to the company’s written constitution, known as its Articles of Association. 

Example: If the Articles say the company needs two directors’ signatures for a loan, you must follow that rule. 

2. To promote the success of the company

What it means: You must make decisions that you believe, in good faith, are most likely to benefit the members (shareholders) as a whole. 

Example: If your business is very sustainability-focused, and you’re choosing between using a cheap supplier that isn’t environmentally-friendly and a slightly more expensive, sustainable one, choosing the more sustainable option might be the right long-term decision to protect the company’s reputation and relationships.

3. To exercise independent judgment

What it means: As a director, you must make your own decisions. You can’t just follow the instructions of others (like a major shareholder) without using your own best judgement. 

Example: A major shareholder insists you must hire their nephew. If you genuinely believe the nephew isn’t the best person for the job, you must make the independent decision to hire someone more qualified.

4. To exercise reasonable care, skill, and diligence

What it means: You’re expected to perform your company director job description with the same care and skill as any reasonable person would if they were fulfilling your role.

Example: You should regularly review company financial statements and ask sensible questions about the company’s cash flow — you can’t just rely on your accountant saying everything looks fine without checking the basics yourself.

5. To avoid conflicts of interest

What it means: This is about not placing yourself in a position where your personal interests clash with the company’s.

Example: If the company is looking to buy office furniture, you shouldn’t secretly steer them towards buying it from a different company you personally own. Here, it would be your duty to declare this interest to your company board before making a purchase.

6. Not to accept benefits from third parties

What it means: This prevents directors from accepting bribes or any financial benefits offered because they are a company director — it ensures loyalty to the company alone.

Example: If a supplier offers you a personal £5,000 cash ‘gift’ to guarantee they win a contract with your company, you must refuse it, as that benefit is being offered to influence your position as a director.

7. To declare an interest in a proposed transaction or arrangement with the company

What it means: If the company is about to enter into a contract where you have a direct or indirect personal interest, you must tell the other directors about it before the contract is signed. 

Example: If your company decides to rent office space and the proposed landlord is your spouse, you must tell the board about your family connection before the lease agreement is signed.

It should be noted that if a director doesn’t follow these duties, it can result in personal liability, disqualification, or even legal action.

Practical and admin-based responsibilities 

Beyond these duties are a company director’s day-to-day responsibilities. This includes the core, legal company admin that keeps a company ticking along well in the eyes of Companies House and HMRC:

• Maintaining company records: This includes keeping accurate accounting records, registers of directors, shareholders, and significant people with control
• Filing annual accounts and confirmation statements: These documents must be submitted to Companies House annually
• Paying corporation tax: Ensuring the company calculates and pays the correct amount of corporation tax on its profits
• Complying with health and safety regulations: Ensuring a safe working environment for employees
• Adhering to employment law: This includes fair recruitment, contracts, and dismissal procedures
• Business Planning: While not a legal duty, the practical reality of the company director’s job description means setting strategy, managing budgets, and overseeing the long-term vision of the business

It’s a common misconception that company directors always earn a huge salary. In reality, what you may earn as a company director can vary wildly depending on your company’s size, profitability, and your specific role.

For the 2025/26 tax year, the most popular route for a company director is to take a small salary equal to the annual Personal Allowance (£12,570). 

Any further income can then be taken as dividends. By balancing the two, you maximise the tax efficiency of the income you draw — it’s a smart way to manage your personal finances and your company’s books at the same time.

We’ll delve into the specifics of optimal salary and dividend strategies for 2025/26 in another article but it’s an important consideration for any director.

National Insurance (NI) for directors is calculated differently to ‘regular’ employees.

For most ‘regular’ PAYE employees, NI is calculated on a weekly or monthly basis. And they pay NI as soon as they earn above the weekly or monthly threshold (£242 per week or £12,570 per year). 

Whereas a company director’s NI liability is calculated on an annual basis.

This annual calculation means that the director only pays NI once their cumulative earnings for the entire tax year exceed £12,570.

This is why a small, consistent monthly salary that stays under that annual threshold is so effective — no NI is paid by either the director or the company, but the director still qualifies for the full state pension credit. 

Whether you’re starting out or growing your team, the process of adding a director is straightforward. It just depends on what stage your company is at.

When forming a company:

When you go through the company registration process with Companies House, you’ll list all the initial directors’ details on Form IN01. Each director is registered with Companies House automatically once your company is formed.

After company formation: 

If your company is already up and running and you need to appoint a new company director, you must follow these steps:

1. Check your company’s Articles: Make sure your company’s Articles of Association let you appoint the director and confirm who has the power to appoint them (usually the existing board or the shareholders)
2. Board decision: The existing directors must formally approve the appointment at a board meeting or in writing
3. File with Companies House: You must fill in and submit Form AP01 (Appointment of Director) to Companies House within 14 days of the appointment date 

As your company grows and changes over time, you might need to remove a director from their position. This is a more formal process than adding a director — basically to make sure all parties understand what’s happening and are protected. 

Here are the steps you should take when removing a company director:

Step 1: Board meeting

You should hold a board meeting to agree on the removal and discuss any special notice requirements mentioned in your company’s Articles of Association.

Step 2: Ordinary resolution

Then, you should call a general meeting, where the company shareholders pass an ‘Ordinary Resolution’ to remove the director.

Note: An ordinary resolution is a vote that needs a simple majority (more than 50%) to be approved.  

Step 3: File with Companies House

Finally, the company must file Form TM01 (Termination of Appointment of Director) to Companies House. 

Tip: You must file Form TM01 within 14 days of the director’s removal date.

It’s really important to handle the removal of a director correctly to avoid any legal challenges, especially if the director is unwilling to leave. Remember to always check your company’s Articles and any existing service agreements before taking action.

If you decide to step down from company director duties, the process is straightforward and doesn’t require the approval of other directors, but you should always let them know.

Here are the steps you need to take to resign as a company director:

1. Give notice: Send a letter or email to the company (to the other directors or the company secretary) stating that you are resigning and the date the resignation takes effect
2. Company action: The company then becomes responsible for updating its internal registers and informing Companies House
3. Filing with Companies House: The company must file Form TM01 (Termination of Appointment of Director) within 14 days (as above)

If the company doesn’t file Form TM01, you can submit a copy of your resignation letter to Companies House yourself. This is a common situation for directors who aren’t happy with their former company, and it protects you and your wishes. 

Companies House is the UK’s official register of companies — it’s publicly available and free to use.

To search for or check a company director on Companies House, all you need to do is: 

1. Go to the Companies House website
2. Use the “Find company information” service
3. You can search by company name, company number, or director’s name

Once you’ve found who you’re looking for, you’ll be able to see details like the director’s name, their appointment date, nationality, country of residence, and any other companies they are a director of. 

What you won’t usually find is a director’s residential address. Many limited companies choose to use an official registered office address to maintain the privacy of its directors. 

There are over 500,000 newly incorporated companies every year — each requiring at least one director. So, if you ever feel alone as a company director, don’t! There are countless other directors out there. While the company director’s job description is big, it’s manageable if you have the right tools and advice. 

Countingup wants to help make running your company as simple and stress-free as possible. Whether you’re just getting started or you’re already an experienced director of a company, it’s a good idea to get your limited company’s finances organised. Our business current account, with integrated tax and bookkeeping features, can help you save time and money.

To all the company directors out there, we’re cheering you on every step of the way!

When a company is dissolved, the company director must deal with remaining assets and keep all company records for a minimum of three years from the dissolution date. If the dissolution process involved fraud or wrongful trading, the director may face disqualification proceedings.

What’s the best pension for a limited company director?

A self-invested personal pension (SIPP) or a workplace pension is usually the best option. Contributions made by the company for the limited company director are generally treated as an allowable business expense, directly reducing the company’s Corporation Tax bill. This offers a highly tax-efficient way to save for your retirement.

A director is primarily an office holder. They become an employee if they have a separate, formal job contract for duties beyond their core statutory role. When they receive a salary through PAYE, they’re treated as an employee for tax purposes, which involves an annual deduction of PAYE and National Insurance.

A limited company must have a minimum of one director. There is no legal maximum number of directors, but many companies find that having an odd number of directors helps prevent deadlocks when voting on resolutions. You simply need enough directors to effectively and legally manage the business operations.