Company directors and company secretaries are collectively known as company officers. In this blog, we will take a look at these two roles, as well as some of the overall requirements for a company officer.
Company director: the primary company officer
The role of a company director 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. In many smaller companies, the director is the sole company officer. Public limited companies, meanwhile, need at least two directors 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
- maintaining the company’s statutory registers, such as the PSC register
In addition, a director must uphold what are known as the seven ‘directors duties,’ which are set out in section 171 to 177 of the Companies Act 2006:
- Duty to act within powers – each company officer must follow the company’s constitution. This includes the articles of association and the memorandum of association. The directors should never act beyond the scope of their powers which is prescribed under the constitution.
- Duty 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 on compliance with this duty.
- Duty 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.
- Duty to exercise reasonable care, skill and diligence – each director must ensure they apply a level of care, skill, and diligence which would be reasonably expected of someone in their role as a company officer.
- 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.
- Duty 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 a company officer.
- Duty to declare interest in 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.
Company secretary: a necessary company officer for PLCs
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 (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
- arranging company meetings and taking minutes
Although they are also a company officer, a company secretary does not have the same legal responsibilities as a director. But in most smaller companies, the directors will also take on the duties 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 qualifications criteria set out by section 273 of the Companies Act:
- They have acted as company secretary for a PLC for at least three of the five years immediately preceding their appointment.
- They are a member of a specified body under section 271(3), e.g. Institute of Chartered Secretaries and Administrators (now renamed The Chartered Governance Institute).
- They are a barrister, advocate or solicitor called or admitted in any part of the United Kingdom.
- 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.”
What are the general requirements for a company officer?
As we have already discussed, company secretaries must be qualified in a public company.
All company directors must be at least 16 years of age.
A company officer cannot:
- be a disqualified director
- be an undischarged bankrupt
- also act as the company auditor
So there you have it!
We have discussed the roles of company directors and company secretaries – collectively known as company officers. We have also covered the qualifications and general requirements for company officers.
If you have any questions, please leave them in the comments section below, and we will get straight back to you.