Whether you’re hands-on day-to-day, more of a silent partner, or involved behind the scenes, every director has clear legal duties under the Companies Act 2006.

Here we explain the seven key duties every director should understand:

Follow the company’s constitution

Every company has a constitution and articles of association which set out how it should be run and what powers directors have. Staying within those powers is essential, if you step outside them, you could be held personally liable. Good financial governance sits at the heart of this, ensuring that the company’s resources are used in line with its rules.

Promote the success of the company

Directors are expected to act in the company’s best interests. But that doesn’t just mean chasing profit. It includes:

• Long-term consequences of decisions.
• The interests of employees.
• Relationships with suppliers and customers.
• The community and environment.
• The company’s reputation.
• Fairness to all shareholders or members.

Financial sustainability is key here. Promoting success means knowing whether the business model is viable, understanding cash flow, and ensuring the numbers support the long-term plan. For example, directors of an estate agency may need to balance quick market wins with maintaining margins, while trustees of a charity must weigh community benefit against financial resilience.

Use your own independent judgment – and add value to the board

Taking advice is sensible, but decisions rest with you. Independent judgment is fundamental, you cannot simply follow instructions from a shareholder or another director. At the same time, directors are not lone operators. Your role is to bring your perspective, skills, and insights to board discussions, challenging and supporting fellow directors to arrive at the best collective decision.

Exercise reasonable care, skill and diligence

You’re expected to carry out your role to the best of your ability, taking into account your knowledge and experience. A qualified professional, such as an accountant or architect, will be expected to apply those skills when acting as a director. That includes engaging with the financial information: reading the management accounts, questioning variances, and understanding how the numbers affect operational and strategic decisions.

Avoid conflicts of interest

Directors need to be alert to situations where personal interests, or those of family members might clash with company duties. This could include personal financial interests, competing businesses, or inside knowledge gained as a director. Even the perception of a conflict should be declared and managed carefully. Transparency is an important part of financial governance and builds trust with stakeholders.

Don’t accept benefits from third parties

Perks and gifts can create misunderstandings. Even small gestures can be misinterpreted, so we always recommend having a clear gifts and hospitality policy. This protects both the business and the director, and ensures decisions are made for sound commercial reasons rather than perceived financial influence.

Declare any interest in company transactions

If there’s any chance you or someone connected to you could personally benefit from a company contract, it must be declared to the board. In some cases, you may need to remove yourself from the decision-making process altogether. This ensures integrity in financial dealings, another cornerstone of strong governance.

Anything else?

Alongside these duties, directors are also expected to maintain confidentiality, act in good faith, and not misuse company property.

At Hunter FDS, we know directorship isn’t just about a title – it carries weight and accountability. With clear financial governance, transparent reporting, and an effective board dynamic, directors can confidently fulfil their duties and focus on building resilient, successful organisations.

We help directors and trustees strengthen financial governance so they can make sound decisions with confidence. If you’d like to discuss your role, responsibilities, or board effectiveness, we’d be delighted to help.