The responsibilities of company directors

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If you are a member of the board of a Community Interest Company, or a charity or non profit that is a company, then you are a company director. 

You should be aware that all company directors have certain duties placed on them by law. The Government has summarised these  key duties as:

• act in the company's best interests, taking everything you think relevant into account
• obey the company’s constitution and decisions taken under it
• be honest, and remember that the company's property belongs to it and not to you or to its shareholders
• be diligent, careful and well informed about the company's affairs. If you have any special skills or experience, use them
• make sure the company keeps records of your decisions
• remember that you remain responsible for the work you give to others
• avoid situations where your interests conflict with those of the company. When in doubt disclose potential conflicts quickly
• seek external advice where necessary, particularly if the company is in financial difficulty.

As an incorporated body a company has limited liability. However it also has a duty not to allow the organisation to keep running and incurring debts once it is clear, or should be clear, that the organisation cannot repay them and will become insolvent.

Useful links

• The Institute of Chartered Secretaries and Administrators (ICSA) is a useful resource on governance and compliance for charities and companies.
• For Love and Money: Governance and Social Enterprise (pdf 1.74kb) highlights aspects of governance that are specific to social enterprises.

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