Are you setting up a new company?
Do you know your duties as a director?
A new business can be set up as a company or you may have an existing business which can be incorporated as a company. The latter is often the case if your business has reached the stage where the increased administrative burden of company law requirements is offset by the benefits that the company structure offers, such as limited liability. A company can be incorporated as:
- a company limited by shares (the most common form);
- a company limited by guarantee; or
- an unlimited company.
If you want to form a new company it must first be registered at Companies House. This is done by filing the necessary documents and paying the required fee at Companies House. The company is brought into existence when the Registrar of Companies (Registrar) issues the certificate of incorporation.
In most circumstances you will need to tailor the documentation to suit your purposes by preparing bespoke articles of association. The articles of association set out the basic management and administrative structure of the company. They regulate the internal affairs of the company including, for example, the issue and transfer of shares, board and shareholder meetings, powers and duties of directors, dividends, borrowing powers and so on. The articles are a public document open to inspection at Companies House. It is a very important document and care should be taken in preparing a set of articles to suit your business.
Once your company is incorporated, you will have to maintain the company at Companies House by submitting an annual return and notifying Companies House of any changes to the make up of the Company.
The Companies Act 2006 sets out the duties of the directors of a company to its shareholders. These are:
- to act within their powers;
- to promote the success of the company;
- to exercise independent judgment;
- to exercise reasonable care, skill and diligence;
- to avoid conflicts of interest;
- not to accept benefits from third parties;
- to declare an interest in a proposed transaction or arrangement.
It does not matter if you are a director properly appointed at Companies House or a shadow or non-executive director, the duties apply equally.
If you require assistance in forming a new company, filing documents at Companies House or advice on directors’ duties generally, please contact the corporate team at Myers & Co.
Based in Stoke-on-Trent, Staffordshire, our corporate lawyers have a reputation for providing expert advice. For further advice contact Myers & Co Solicitors on 01782 577000.
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