In this I Hate Numbers podcast, we want to explore the multifaceted world of company director responsibilities. As business enthusiasts with over 28 years of experience, we've had the privilege of helping countless entrepreneurs reduce stress, boost financial literacy, and achieve their dream business. In this episode, we guide you through the critical aspects of being a company director.

Fiduciary Duty

Accordingly, at the heart of director responsibilities lies the fiduciary duty. Directors, in the UK and beyond, have a legal obligation to act in the best interests of the company. This means prioritizing the company's success while considering the long-term consequences of every decision we make.

Duty of Care

Consequently, we must exercise reasonable care, skill, and diligence in our roles. Every decision we make should be well-informed, based on relevant information, and devoid of negligence.

Conflicts of Interest

Likewise, to maintain the company's integrity, we need to avoid conflicts of interest. We act as custodians, safeguarding the company's assets. Whenever a conflict arises, whether direct or indirect, it's our duty to declare it and make other directors aware.

Statutory Responsibilities

Moreover, we shoulder the responsibility of preparing and filing accurate financial statements, annual reports, and confirmation statements. These documents, in the public domain, uphold transparency and confidence among stakeholders.

Compliance

During our journey as directors, we must ensure that the company complies with all applicable laws, including health and safety regulations, employment law, and data protection. Ignorance is not an excuse; it's our duty to maintain effective governance.

Delegation and Supervision

Simultaneously, while we can delegate certain tasks, the ultimate responsibility for maintaining records and content lies with us, the directors.

Decision Making

Therefore, directors share the responsibility for major decisions impacting the company's direction, operations, and finances. We must actively participate in board meetings, keeping notes to document our discussions.

Stakeholder Engagement

Furthermore, engaging with shareholders, employees, customers, suppliers, and the community is essential. Effective communication helps maintain positive relationships and mitigates potential issues.

Risk Management

Undoubtedly, identifying and managing risks that could affect the company's success or reputation is a key duty. We must ensure we steer clear of situations that could lead to personal liability.

Conclusion

In conclusion, being a company director brings both opportunities and responsibilities. While the benefits are numerous, it's vital to embrace our obligations to ensure the company's success. By adhering to our fiduciary duty, exercising due care, avoiding conflicts of interest, and complying with regulations, we can navigate the complex world of director responsibilities effectively. Remember, we are the pilots of the ship, steering our companies toward success, and it's a journey well worth taking.

If you found this episode valuable and insightful, we encourage you to share it with others who can benefit from these valuable tips and strategies. Join the ‘I Hate Numbers‘ community, where you can gain support, and access resources to conquer financial challenges. Plan it, Do it, Profit!

There are many benefits to being a company director, whether that's for a private organisation or a not-for-profit organisation. However, the role also carries significant responsibilities and challenges. In this week's I Hate Numbers podcast, I'm going to be outlining and focusing on 10 things to be aware of

if you are going to be a company director. And even if you are an existing company director it’s always good to be aware of what your key responsibilities and obligations actually are.

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. My name is Mahmood. I'm the founder/owner of I Hate Numbers and book of the same name. And for over 28 plus years, I've been helping thousands of business owners make more money, reduce their stress and tax liabilities, increase their financial understanding and literacy, and have the businesses they aspire to have.

What's not to love about that? Let's crack on with a podcast. Now, in summary form, even though there are a lot of benefits to being a company director, and I've been a director in my own company, as well as being a non-executive and a director in other companies, and it's a great beneficial thing to do.

However, I'm going to be focusing on the obligations and the responsibilities. It makes no odds whether you are a small-sized company or a large company. Responsibilities are still there. In essence, directors are held accountable for the actions of the company. They have a responsibility to make sure there's legal and ethical compliance, manage those risks, make decisions which could be problematic, and it will impact the company and its various stakeholders.

So it is really important that you're fully aware of what those obligations actually are. The first thing is to be aware UK company directors, and this applies to other directors in other jurisdictions, have what's called a fiduciary duty. Doesn't that sound wonderful? And that's to have a legal duty, a legal obligation to act in the best interest of the company of which they are a director.

This means you have to act honestly in promoting the success of your business of the company, while considering also the long-term impact, the decision making and the actions of the company will have. You need to take on board the interest of the shareholders, employees, your business relationships, and the company's impact also on its immediate community and wider community and the environment.

Obligation Number two, the duty of care. Now, directors are expected to make sure they exercise reasonable care, skill and diligence in their roles. Any decisions that you make must be informed based on relevant information, and you must act prudently to make sure you avoid any negligence in the discharge of your duties.

Far too many people think that once you become a director of a company, Then you absolve yourself of any responsibilities and you can't be held accountable, and that's far from the truth. Obligation, or responsibility number three is your duty to avoid conflicts of interest. Remember, you are a custodian.

You are there to exercise due diligence and safeguarding the company's assets, so you must avoid those situations where your personal interests will conflict with the interests of the company. If you have a conflict, a direct or indirect interest in a proposed transaction for the company, then you must make sure you declare that and make the other directors aware of that conflict.

Again, that applies whether you are a director of a private company or a not-for-profit organisation. Our fourth responsibility is the statutory side of things. Now, when we talk about directors being responsible for preparing and finding accurate statements, annual reports, the annual confirmation statement to Companies House, you can delegate that responsibility, but ultimately, the responsibility lies with the directors.

Those financial statements that are in the public domain, enable transparency, give confidence to those stakeholders that will interact with the company. So even though you may delegate that responsibility to a firm of accountants like ours, ultimately is the directors that assume the final responsibility for those accounts.

What's our next obligation in our list? We've covered four already. Number five - compliance. Directors have that responsibility, have that obligation to make sure that the company operates in compliance with all the relevant laws, health and safety regulations, and industry standards. Ignorance is no excuse in this respect.

Now, this covers areas I've already said like health and safety, but it also covers things like employment law, data protection, and general corporate governance. It's your responsibility as a director to make sure you maintain effective governance within your company. And this also includes setting strategic objectives, monitoring the performance, and making sure you've got a good handle on risk management.

Obligation number six, delegation and supervision. Now directors can delegate specific tasks and responsibilities to employees, company officers, third parties. So the production of those statutory accounts, for example, may be outsourced. In our firm, we undertake accounts preparation for a wide variety of companies, but ultimately, the responsibility for maintaining those records, the content of those accounts rests with the directors.

Number seven, decision-making. Directors operate under a collective responsibility arrangement, and they're collectively responsible for the major decisions that impact on the company's direction, its operations and its finances. Typically, those decisions are made by the mechanism of board meetings.

Those board meetings should be minuted and directors should be less passive and more active in their discussions and decision-making processes. Now folks, if you are part of a small company, so maybe there's only one or two directors, those responsibilities are not absolved. So paperwork, meetings, minutes notes are still a requirement.

It's less top-heavy than it would be for a PLC. Those obligations do not dissipate purely because you are a single director or two or three directors that make up the board of directors in your company. We're on the home track now. Let's look at our next obligation, and that's about stakeholder engagement.

Now, directors need to engage with a variety of stakeholders, including shareholders if you're a private company, employees, customers, suppliers, the wider community. And communication and engagement can help maintain those positive relationships and mitigate any problems that might occur. The last one we're going to factor in

is about risk management. It's the director's responsibility to identify and manage those risks, which could impact the company's success or reputation. So avoiding things like trading when you're insolvent, that is the responsibility of the directors. Directors, by the way, can be held personally liable for misdeeds, corporate manslaughter,

misappropriation of assets. So, it is a folly to think that because you operate through a limited company, you have no personal exposure at all. Make sure you've got good risk management procedures in your company and a central requirement. The directors are the pilots of the ship. They are the ones who direct the company,

impact and input into its strategic direction and bear the ultimate legal responsibility. Now, one last thing I should have commented on is what's the conditions? Well, as long as you're over 16, you can be UK-based, but as long as you've got a UK-registered address, you can be a company director. Make sure you're not disqualified.

Make sure that you fit the criteria, and despite the obligations that I've outlined, all these things are perfectly manageable. And it's an excellent way to develop your skills, and obviously if it's your company, by default, you are likely to be the director as well. So make sure you're aware of what those responsibilities are, getting accounts in on time, making sure confirmation statements are filed correctly.

If not, not only will there be potential penalties coming out the system, but you could be held culpable as well. Folks, I hope this podcast been of some use to you. Share some love, share some feedback, share with those who you feel would benefit from it as well. Until we speak next time, happy directing.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.