People, Positions & Responsibilities
There are several roles that need to be filled in a company. Some are requirements, others are not, but they all have legal responsibilities tied in with their positions. Read this guide to find out the roles and responsibilities of Directors, Shareholders, Company Secretaries and Accountants.
A director sees to the day-to-day running of a company and manages operations. There can be more than one director of a company, but to be one, you must meet the following criteria:
- A company director must be 16 years old or over
- A company director must have no history of bankruptcy
- If you are prohibited by a court order from becoming a director, you cannot be appointed as one
The most important role of a director is acting in the companys best interest. This means putting the company first in order to make it successful.
There are penalties in failing to do the above. This involves prosecution, the potential of being disqualified as a director by HMRC and fines up to £5,000 per offence. Working with company secretaries and accountants can make life a lot easier.
Self-assessment tax returns
As a director, you have to complete a self-assessment tax return every year by the 31st of January with HMRC. This document includes your salary, any dividends you receive, other income such as bank interest, tax relief and other expenses.
You can complete this form online.
If you fail to complete it by the 31st of January you will get a fine of a minimum of £100.
National Insurance Contributions (NICs)
Like any employee, directors have to pay NICs on their annual salary and bonuses totalling over £8,060. The NICs should be paid as the director is paid (e.g. monthly, weekly etc.).
Company director's loans
As a director, you can open a directors loan account. This allows you to take a loan from the company itself. You can borrow money that is not a salary payment, dividend payment or expense repayment.
Make sure to keep a detailed record of the amount you borrow and pay back.
A directors loan is subject to tax.
Removing a director
There can be times where a director has to be removed in the company's best interest. You have to have a just cause to remove a director. If you can show that a director is acting against any of the statements of the Companies Act 2006, they can be removed by 'ordinary resolution'.
They can also be removed if any of the following bodies disqualify them:
- The court
- An insolvency service or company insolvency partner
- Companies House
- The Competitions and Markets Authority (CMA)
There are three actions a director can then take. Go to court to receive an official disqualification, go to court and defend themselves, or resign voluntarily. Once the director has been removed, Companies House must be contacted so that all documents can be updated.
A shareholder (also known as a member) owns part of a company by buying a share of it. They do not, however, run it. You can be both a shareholder and a director, but regardless of this, the two duties operate independently of one another.
By investing capital into a company, the shareholder then owns a part of it, and with that comes other responsibilities and powers. Dividends are given to shareholders as determined by the director and in accordance with the rights attached to the shares, the shareholder has the authority to change company constitution, shareholders can set the salary of a director and determine how much power they have, shareholders can appoint directors, shareholders can vary the rights attached to their shares and, should the company be closed, they have the right to an amount of any surplus capital.
If a shareholder has more than 25% of voting rights or shares of a company, they qualify as a Person of Significant Control (PSC).
A Person of Significant Control (PSC) is anyone that exerts a significant influence or control over a company. It is a legal requirement to send details of your company's PSCs to HMRC. Please read our dedicated guide to PSCs here.
A company secretary is in charge of the company's administration. They are responsible for the submission of annual confirmation statement and other statutory compliance. It is normal for them to be involved in other administrative work such as arranging meetings, shareholder communication and corporate governance. If there is no company secretary, these tasks will have to be done by the director(s).
A company secretary has to be organised and efficient due to the nature of their work. This supportive role includes tasks like:
- Filing annual confirmation statements
- Informing Companies House of changes
- Updating the company's statutory books
- Communication with shareholders
- Maintaining paperwork
- Signing paperwork
As a company secretary, you can be prosecuted if you are neglectful or willingly break the law. Not filing annual confirmation statements and other documents could mean receiving a large fine or criminal charges. This however, is a more common risk in larger public companies than in new startups.
If you do not have a company secretary, but need some more complex admin dealt with, we offer expert company secretarial services.
Having a professional accountant onboard is always a good idea. Ultimately, cash is what will control your company so having an experienced person working on your finances is really important. You can outsource this work, add these responsibilities to your own role or get an in-house accountant.
An accountants role is broad, but some of the main tasks include:
- Dealing with VAT, PAYE and corporation tax
- Raising invoices, paying invoices and collecting money
- Helping management make the right decisions with financial thinking
Accountants dont normally have any legal liabilities unless they act against the law. The only way in which they could be liable is if, when your company grows, they are named a financial director.
If you're not sure where to start, our HMRC topping includes a free consultation call from an experienced accountant.