Duties of Company Directors

FWBO Centres or businesses which are registered as limited companies (perhaps in addition to being charities) will have Directors (who may ‘double up’ Trustees, if a charity). As Directors, you have certain duties, and this is a guide to some of them. The primary duty – and the one you’re most likely to get into troble over – is delivering your accounts on time. A general guide is available from the DTI here: Guidance on Directors’ Duties; what follows are some more specific points that may have escaped your notice. Thanks to Dharmashura for providing this information.

Display of business name
From 1 October 2008 the company’s registered name must be visible to visitors at the company’s registered office, any other place where the company carries on business unless the place is used primarily as living accommodation, and any inspection place where company records that have to be available to the public are kept. The name must be visible with the naked eye (this includes wearing spectacles etc).

The previous requirement for the name to be on the outside the building, or visible from the outside during normal working hours, no longer applies, provided the name is “positioned so it may be easily seen by any visitor” to the registered office, place of work or inspection place.

company documents
From 1 October 2008 the Companies (Trading Disclosures) Regulations 2008 set out new rules for what must be disclosed on company documents. These are very similar to the previous provisions, but make clear that any reference to a document includes hard copy (paper), electronic or any other form, and any reference to a website includes not only the company’s own website, but also any other website relating to the company that the company has caused or authorised to appear.

All disclosures must be large enough to be read by the naked eye — so no teeny weeny small print. As under the previous legislation, the registered name must be on all business letters, notices (of meetings etc) and other official publications; bills of exchange, promissory notes, endorsements and order forms; cheques; orders for money, goods or services; and bills of parcels, invoices and other demands for payment, receipts and letters of credit. A new requirement is for the name to be on all applications by the company for licences to carry on a trade or activity, and all other forms of its business correspondence and documentation. This basically means that the registered name must be on just about everything, both paper and electronic, unless it is purely internal within the company.

Business letters, order forms and websites must also include the part of the UK in which the company is registered (this will be set out in the clause in the memorandum which says where the registered office must be, and will be either England and Wales, England, Wales, Scotland or Northern Ireland); the company’s registered number; and the address of the registered office. If it is exempt from having to use “limited”, “ltd” or the Welsh equivalents (as most voluntary sector companies are), or if it is a community interest company which is not a public company, these documents must say it is a limited company.

As under the previous legislation, if the name of any director is included in a business letter, other than in the text or as a signatory, the names of all the directors must be included. This means that if the company’s headed paper, compliments slips or email signature block list one or more directors, they must list all of them. This applies even if someone who is a director is listed as ‘chair’ or ‘company secretary’ rather than as a director.

Conflicts of Interest
1. From 1 October 2008 new statutory duties are added to those introduced on 1 October 2007. The new duties require company directors to avoid conflicts of interest, not to accept benefits from third parties, and to declare interest in a proposed transaction or arrangement with the company (in addition to the current requirement to declare an interest in an existing transaction) (ss.175-177).

In the past it was often enough for a company director with a conflict of interest or a conflict of loyalties simply to declare the conflict, have the declaration minuted or entered in a register of directors’ interests, and not take part in discussions or decisions affected by the conflict. This is no longer the case, and from 1 October 2008 new rules govern authorisation and approval in conflict of interest situations. Some of these rules are still unclear — especially where they overlap with charity law rules on conflicts of interest — so the information below should be taken as preliminary, and provides only an overview rather than the details of the law. Company directors are very strongly advised to take advice from their legal advisors, and/or in charitable companies to seek advice from the Charity Commission.

The Charity Commission’s Guide to conflict of interest for trustees, has not yet been updated to cover the new requirements for charitable companies, but provides a useful starting point for thinking through the issues and developing a conflict of interest policy.

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