Overview of Duties
The main duties of a director as taken from the statutory statement of director’s duties.
1. Act within their powers
A director must act within his powers under the company’s constitution and only exercise his powers for the purpose for which they were conferred (CA 2006, s171).
2. Promote the success of the company
A director must ‘act in a way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole’ (CA 2006, s172). This duty applies to all directors’ actions, not just those exercised at board meetings. When making decisions, directors must ensure they have regard to the likely consequences of the decision over the long term, which means they must take account of the:
• interests of employees
• impact on the community and environment
• need to foster business relationships with suppliers, customers and others
• need to act fairly between members
• a need to maintain a reputation for high standards of business and conduct
3. Exercise independent judgement
A director must exercise independent judgement (CA 2006, s173). This duty largely codifies the requirement in common law for directors to exercise their powers independently, without subordinating their powers to the will of others and without fettering their discretion.
4. Exercise reasonable care, skill and diligence
A director must exercise such reasonable skill, care and diligence as would be exercised by a reasonably diligent person with:
• the general knowledge, skill and experience that could reasonably be expected from a person carrying out the director’s functions; and
• the director’s actual general knowledge, skill and experience (CA 2006, s174).
5. Avoid conflicts of interest
A director has a statutory duty to avoid any situations in which he has, or could have, a direct or indirect interest that conflicts, or could conflict, with the interests of the company (CA 2006, s175). This applies in particular to the exploitation of property, information or opportunity regardless of whether the company could take advantage of it. It applies to a conflict of duty, as well as a conflict of interest and includes the interests of ‘connected persons’.
6. Not accept benefits from third parties
A director has a statutory duty not to accept a benefit from a third party which is given because of the position held by the director or because of anything the director has done in his capacity as a director (CA 2006, s176). In brief, acceptance of benefits is not subject to any ‘de minimis’ limit and is only permitted where the matter is approved by the company’s members or it can reasonably be regarded that it will not give rise to a conflict of interest with the company.
7. Declare interests in transactions or arrangements
A director of a company has a statutory duty to disclose any direct or indirect interest he has in a proposed transaction or arrangement with the company (CA 2006, s177). Furthermore, the director has a duty under CA 2006, s182 to declare any interest held, direct or indirect, in an existing transaction or arrangement.
Organisations
The following organisations help prepare people for life as a non-executive director and offer on-going support to those currently in a NED role:
The Non‐Executive Directors Association ('NEDA') is the first independent members association dedicated to NEDs.NEDA promotes and supports the day to day needs of NEDs at all levels – aspiring, new and experienced. It provides member NEDs with a comprehensive range of practical support and advisory services.
Informal support for senior executives of leading businesses who are considering becoming non-executive directors (NEDs) as well as existing NEDs who wish to keep up to speed with the latest issues affecting boardrooms today.
Opportunities
The following organisations help people secure NED-equivalent roles in the voluntary sector, including schools, non-profits and sport.
Not-for-profit:
A charity that helps individuals, employers and members of professional networks become new leaders in communities through board-level volunteering.
The Small Charities Coalition serves charities with annual income of less than a million pounds a year. It helps trustees, staff and volunteers of small charities access the skills, tools, and information they need to get going and do what they do best. These services include trustee recruitment.
Trustees Unlimited is a business with a social purpose: to help not for profit organisations recruit high quality trustees in a rigorous and cost effective way.
Schools:
A free school governor and trustee recruitment service that seeks to ensure that all schools have access to high quality governors with transferable business skills.
An information service about school and college governance for volunteers, employers and educational organisations.
Sport:
Non-Executive Director Matching Service
This member service is designed to help support you with the recruitment of your non-executive directors (NEDs) or find opportunities for you to become a board director.
