Role of a company director

1. Can anyone be a director?
Generally it is up to the members (shareholders) to appoint the people they believe will run the company well on their behalf. The only restrictions that prevent anyone becoming a director are:
• the person must not have been disqualified by a court from acting as a company director (unless he or she has been given leave (permission) to act by a court for a particular company);
• the person must not be an undischarged bankrupt (except with leave of the court);
• in Scotland, anybody under the age of 16; and
• for a PLC or their subsidiaries, anybody over the age of 70 unless specifically approved by a general meeting of the company.

2. What responsibilities does a director have towards Companies House?
Every company director has a personal responsibility to ensure that statutory documents are delivered to the Registrar as and when required by the Act. In particular:
• accounts;
• annual returns (Form 363);
• notice of change of directors or secretaries or in their particulars (Forms 288a/b/c); and
• notice of change of registered office (Form 287).
These duties can be performed by the Company Secretary

3. What happens if accounts or annual returns are not filed?
All the directors of the company could be prosecuted. Failure to deliver documents on time is a criminal offence. On conviction, a director could end up with a criminal record and a fine of up to £5,000 for each offence. Alternatively, if the Registrar believes that the company is no longer carrying on business or in operation, he could strike it off the register and dissolve it. If this happens all the assets of the company, including its bank account and property, generally become the property of the Crown. The company can only be restored to the register and continue in existence by means of a court order.

4. Are directors really prosecuted?
Yes. On average more than 1,000 directors are prosecuted each year for failing to deliver accounts and returns to the Registrar on time. Persistent failure to deliver statutory documents on time may also lead to a director being disqualified from taking part in the management of a company, for a specified period.

5. What happens if accounts are delivered late?
As a director of a private limited company, you normally have a maximum of 10 months from the accounting reference date in which to deliver your company's accounts to the Registrar. The accounting reference date is the date to which your accounts must be prepared. Important if your company's first accounts cover a period of more than 12 months, they must reach Companies House within 22 months of the date of incorporation for private companies and 19 months for public companies. If accounts are received late, the company will automatically be charged a 'late filing penalty'. These penalties can be in addition to any fine imposed by a court. The late filing penalty will be calculated according to the following scale:

6. How can prosecution and penalties be avoided?
Make sure your company complies on time with all its filing obligations, not only in connection with its accounts and annual returns, but in connection with all other documents required under the Act.

7. Isn't my accountant supposed to do all this?
Your accountant's responsibilities depend on the agreement you have with him or her. However, the responsibility to deliver accounts and other statutory documents rests entirely with the directors. Ensure that your accountants have all the necessary information to prepare your accounts and get them audited on time. If necessary, chase your accountants. Don't just assume they are getting on with the job. Accountants and financial advisers don't get prosecuted or penalised for late filing. You do!

8. Why does Companies House need this information?
In exchange for the benefits of trading with limited liability, companies must deliver certain information about themselves to the Registrar. He must then make this information available for inspection by the public so that they can make informed decisions about companies that they may wish to invest in or do business with.