Hi there, Nicholas Campion here from 1st Formations, back with another episode of Whiteboard Thursday -
your source of business and company advice. In today's video, we're going to discuss company
directors and company secretaries - collectively known as company officers. And for this, we'll
take a look at the two roles individually, what sort of general responsibilities they
hold, as well as the eligibility requirements. So first up is the company director, whose role,
very simply, is to manage the company. They have overall responsibility for the performance of
the business, along with a range of corporate legal responsibilities. Every private limited company in
the UK is required to have at least one company director, and in many smaller companies, the director is the
sole company officer. Public limited companies, meanwhile, need at least two directors to be
appointed at all times. Some of the various responsibilities of this company officer
include: ensuring the articles of association are followed; keeping official company
records up to date; preparing company accounts, confirmation statements and company tax returns;
and maintaining the company's statutory registers (such as the Register of People with Significant
Control). In addition, a director must uphold what are known as the seven "directors' duties."
These are set out in sections 171 through 177 of the Companies Act 2006. They are absolutely crucial,
so we'll go through each of them individually, to get a feel for their requirements.
Number 1: To act within powers - each company director must
follow the company's constitution, and this includes, principally, the articles of association
and the memorandum of association. The directors should never act beyond the scope of their powers
which are prescribed under the constitution. The second duty is to promote the
success of the company - directors have a statutory duty to strive for company success on behalf of
the shareholders, staff, and others. Companies with over 250 employees are even required to
report specifically on their compliance with this duty. Number 3: To exercise independent judgment -
each company officer in the role of director is required to exercise their own judgment and
form impartial opinions, regardless of the wishes of major shareholders or other key stakeholders.
Number 4: To exercise reasonable care, skill and diligence - directors must ensure
they apply a level of care, skill and diligence which could be reasonably expected of someone
in their role as a company officer. Number 5 is the duty to avoid conflicts of interest - directors
should not exploit any property, information, or opportunity which belongs to the company,
and must avoid any conflicts of interest. Number 6: Not to accept benefits from third parties -
directors should not accept any benefits such as gifts or money which are given due to their
position as director. And finally Number 7: To declare interest in any proposed transaction or
arrangement - a declaration must be made by company directors if they have a personal interest in any
proposed transaction or arrangement with the company. If a director fails to comply with any
of their responsibilities, this can lead to fines, prosecution, and disqualification. If a director is
disqualified, they are not allowed to serve as a company officer until their disqualification
period comes to an end. So that's the directors, now let's take a quick look at company secretaries.
A company secretary is the other type of company officer. Although there is no legal requirement
for a private limited company to have a company secretary, every public limited company (also known
as a 'PLC') must have at least one company secretary in accordance with section 271 of the Companies
Act 2006. The duties of a company secretary may include: keeping the statutory
registers up to date and reporting any relevant changes to Companies House; ensuring they
are aware of all the latest corporate governance rules and that the company complies with its
corporate responsibilities; and arranging company meetings and taking minutes. Whilst company
secretaries are also an officer of the company, they don't have the same legal responsibilities as
a director - although it's not uncommon in smaller companies for directors to also take on the role
of a company secretary. A company secretary in a private limited company does not need any specific
qualifications or experience. However, in a PLC this company officer must meet at least one of
the qualification criteria set out by section 273 of the Companies Act; that is: They have
acted as a company secretary for a PLC for at least three of the five years immediately
preceding their appointment; Or they are a member of a specified body under section 271
clause 3, for example - the Institute of Chartered Secretaries and Administrators - now renamed The
Chartered Governance Institute; Or they are a barrister, advocate or solicitor called
or admitted in any part of the United Kingdom; Or finally, as a result of having held a particular
position or belonging to a body, they appear to the directors "to be capable of discharging the
functions of secretary of the company." Lastly, let's consider the eligibility requirements
for a company officer. As we have already discussed, company secretaries must be qualified in a
public company; however, they do not necessarily need to be qualified in a private company.
With regards to company directors, they must be at least 16 years of age. And company officers
cannot: be a disqualified director; be an undischarged bankrupt; or, also act as
the company auditor. And there you have it. In this video, we have discussed the roles of company
directors and company secretaries, who are collectively known as company officers. We've
looked at their roles and responsibilities, as well as their eligibility requirements.
If you have any questions, please leave them in the comments section below, and in the meantime be sure
to subscribe to our channel to get more advice on limited companies, reporting requirements and tax
obligations. We're always happy to hear from you, and we can't wait to help. Until next time, cheerio.