Directors have many business responsibilities for ensuring the success of their company, in areas such as health and safety, employment law and tax.

You run the risk of serious penalties if you don't ensure that key information is sent to Companies House. You must also ensure that the company produces annual accounts.

Until recently the role and responsibilities of company directors was defined by case law. The Companies Act 2006 confirms existing case law and requires company directors to act in a way which is most likely to promote the success of the business.

Appointing new directors

Every limited company must have at least one director. A public limited company or plc must have at least two directors.

In general, it's up to shareholders to appoint whom they want as director. But there are restrictions on candidates, namely:

• you must not have been disqualified by a court from being a director - if you have, you need the court's permission
• you must not be an undischarged bankrupt - if you are, you need the court's permission
• if based in Scotland, you must not be under the age of 16  

The appointment of directors must also comply with the company's Articles of Association. These set out rules for how the company is to be run. They may include, for example:

• how many directors there should be
• how long they can serve
• what happens at the end of their term

For example, in many companies directors are required to retire after a set term - say three years. They can offer themselves for re-election at the shareholders' annual general meeting.

The Companies Act 2006 will introduce separate and more straightforward model Articles of Association for private companies. The details of the new model Articles of Association have not yet been confirmed, but the provision is expected to be in force by October 2009.

A director may be involved in day-to-day management, but doesn't have to be. These non-executive directors still have the same legal responsibilities as other directors.

You must tell Companies House within 14 days when:

• you appoint a new director - using form 288a  
• someone stops being a director - using form 288b  
• there's a change in a director's details - name or address, for instance - using form 288c 

Directors' powers and financial liabilities

The company's Memorandum and Articles of Association limit what directors can do. Although they usually give you a great deal of freedom, you must check. For example, you might:

• be restricted by the company's objectives to running a particular type of business - for instance, an IT consultancy
• not be allowed to borrow money

The Companies Act 2006 introduces separate and more straightforward model Articles of Association for private companies. The details of the new model Articles of Association have not yet been confirmed, but the provision is expected to be in force by October 2009.

The role of the company director has until recently been defined by case law. The Companies Act 2006 confirms previous case law and requires company directors to act in a way most likely to promote the success of the business.

You must exercise a degree of skill and care. You must:

• show the skill expected of a person with your knowledge and experience
• act as a reasonable person would do looking after their own business

You must act in good faith in the interests of the company as a whole. This includes:

• treating all shareholders equally
• declaring any conflicts of interest
• not making personal profits at the company's expense

You must obey the law:

• company law requires you to produce proper accounts and send various documents to Companies House
• other laws include areas such as health and safety, employment law and tax
• you may be responsible for the actions of company employees

If in doubt, take professional advice. Acting improperly can lead to fines, disqualification from being a director, personal liability for the company's debts or a criminal conviction.

Sending documents to Companies House

Company law makes you responsible for sending various statutory returns to Companies House.

Even though companies may delegate these tasks to other organisations or individuals, eg the company secretary, you are still responsible for filing documents at Companies House. For more information, see our guide on company secretaries' responsibilities.

Late filing of accounts leads to an automatic civil penalty, in the range of £100 to £1,000 for a private company, and £500 to £5,000 for a public company. Failing to file accounts or the annual return on time, or not at all, is also a criminal offence. If you are prosecuted and convicted you could end up with a criminal record and a fine of up to £5,000. You may also be disqualified from acting as a director.

What you must tell Companies House

• Check and return the annual return. This shows the information that Companies House has on your directors, shareholders and so on. For more information, read a guide to the annual return on the Companies House website.
• Ensure the company produces and files an annual report and accounts. For more information, see the guide on accounts and accounting reference dates at the Companies House website.
• Advise if you change your registered office address, using form 287.
• Advise of the appointment of a new director or company secretary, using form 288a.
• Send notification when the appointment of a director or the company secretary ceases, using form 288b.
• Advise of any changes to their personal details such as name or address, using form 288c.