UK directors carry seven statutory duties under Companies Act 2006 sections 171 to 177, plus extensive obligations on filing, tax, employment, health and safety, and insolvency. Get them wrong and personal liability follows: financial penalties, disqualification under the Company Directors Disqualification Act 1986, and in serious cases criminal prosecution.

This guide covers the seven statutory duties, the day-to-day filing and admin duties, what changes when the company becomes financially distressed, and the personal-liability scenarios you need to know about.

Quick answers

  • The seven statutory duties: Companies Act 2006 codified directors’ fiduciary duties for the first time.
  • Filing and admin duties: Beyond the statutory duties, every director has ongoing duties and responsibilities to ensure the company meets its filing and regulatory requirements under UK company law:
  • Duties to creditors when insolvency looms: A director’s primary duty under section 172 is to promote the success of the company for shareholders.
  • Employment law duties: If you employ staff, directors are responsible for ensuring the company meets:
  • Key takeaways: Seven statutory duties under Companies Act 2006 ss.171 to 177

The seven statutory duties

Companies Act 2006 codified directors’ fiduciary duties for the first time. Under UK company law, it is the core legal framework setting out the seven statutory duties as the key duties, general duties, directors duties, and legal duties of every company director, and they apply to executive directors, non executive directors, and shadow directors whether formally appointed or not.

Section 171: Duty to act within powers

A director must act in accordance with the company’s constitution, including its articles of association, and only exercise powers for the purposes for which they are conferred. They must also follow the company’s articles when using those powers and obtain any required shareholder approval. Acting outside the articles, or using a power for an improper purpose, breaches this duty.

Section 172: Duty to promote the success of the company

A director must act in good faith in the company’s best interests by promoting its success for members as a whole. The Act says directors must consider the long-term consequences of decisions, the interests of employees, the effect on various stakeholders, the need to foster business relationships with suppliers and customers, the company’s impact on the community and environment, high standards of business conduct, and fairness between members. Board decisions should be justified by long-term success, not just short-term gain. This is the most-cited duty in disputes. Since 2019, larger companies have had to report on how they promoted success under section 172.

Section 173: Duty to exercise independent judgement

A director must exercise independent judgement. They must not be a mere delegate of another party’s commands, and blindly following instructions, even while working with fellow board members, or contracting away discretion breaches this duty (with limited carve-outs for arrangements entered into by the company itself, or those agreed in the articles).

Section 174: Duty to exercise reasonable care, skill, and diligence

A director must exercise the care, skill, and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the functions of a director, plus the actual knowledge and experience of the specific director. The standard is dual: objective (what should a director do) and subjective (what does this director actually know).

Section 175: Duty to avoid conflicts of interest

A director must avoid situations where they have, or could have, a direct or indirect interest that conflicts with the company’s interests. Directors should inform the board of any potential conflicts as soon as they arise. The duty applies in particular to the use of company property, information, or opportunity. Conflicts can be authorised by independent directors (or shareholders) under proper procedures, so the board can then manage or authorise the conflict properly.

Section 176: Duty not to accept benefits from third parties

A director must not accept benefits from third parties given because of their position. This dovetails with the Bribery Act 2010 corporate offence regime.

Section 177: Duty to declare interest in proposed transactions

A director must declare to the board or the other directors the nature and extent of any interest in a proposed transaction or arrangement before the company enters into it. For example, failing to disclose an interest for personal gain can lead to repayment, resignation, and legal action.

Filing and admin duties

Beyond the statutory duties, every director has ongoing duties and responsibilities to ensure the company meets its filing and regulatory requirements under UK company law:

  • Annual accounts within nine months of the accounting reference date (private limited)

  • Confirmation statement within 14 days of the review period end

  • Corporation Tax return within 12 months of the accounting period end

  • PAYE/NI through Real Time Information for any payroll

  • VAT returns quarterly if registered

  • Notifications of director, registered office, and share-capital changes within 14 days, with these filings and company changes submitted to companies house.

Companies House offers email reminders for annual accounts and confirmation statements.

These admin obligations apply to new and existing directors, and existing directors should monitor Companies House updates and guidance.

The director is in default for any failure to file, even if the work has been delegated to an accountant.

Duties to creditors when insolvency looms

A director’s primary duty under section 172 is to promote the success of the company for shareholders. But once a company faces a real risk of insolvency, that duty shifts to creditors.

The Supreme Court confirmed this in BTI 2014 LLC v Sequana SA [2022] UKSC 25. The duty to consider creditor interests can engage when a company is in financial difficulty even before formal insolvency. Directors who continue to take actions that prejudice creditors (paying themselves dividends, making payments to connected parties, granting late security) at that point face personal claims.

Two specific Insolvency Act 1986 provisions are critical:

  • Section 214: Wrongful trading. A director who allows a company to continue trading when they knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation can be ordered to contribute personally to creditors.

  • Section 212: Misfeasance. Directors can be held personally liable for breaches of duty that have caused loss to the company.

If your company is in real financial trouble, take advice from a licensed insolvency practitioner promptly. Trading on without doing so is the single fastest route to personal liability.

Employment law duties

If you employ staff, directors are responsible for ensuring the company meets:

  • National Minimum Wage and National Living Wage obligations

  • Pension auto-enrolment (employer minimum 3% of qualifying earnings, total minimum 8% in 2026/27)

  • Right-to-work checks under Home Office rules

  • Statutory pay (SSP from day one of sickness from 6 April 2026, SMP, SAP, SPP)

  • Equality Act 2010 compliance and anti-discrimination duties

  • Health and safety under the Health and Safety at Work etc. Act 1974

To get started on employment compliance for the first time, see how to take on your first employee.

Personal liability scenarios

Beyond statutory and fiduciary duties, failures in corporate governance and compliance can create personal liability as well as operational risk:

  • Personal guarantees. Most SME unsecured lending requires a personal guarantee from one or more directors. The guarantee survives insolvency.

  • Director loan accounts. Drawn down loans must be repaid; overdrawn accounts at year-end can attract section 455 tax charges and benefit-in-kind treatment.

  • Disqualification. The Company Directors Disqualification Act 1986 allows the Insolvency Service to seek disqualification orders for between two and 15 years for misconduct, including persistent late filing, trading while insolvent, or fraud.

  • Health and safety prosecutions. Under HSWA 1974 directors can be personally prosecuted (and imprisoned) where consent, connivance, or neglect is established.

  • Bribery and fraud. The Bribery Act 2010 and Fraud Act 2006 create personal criminal liability for directors involved in bribery or fraudulent trading, and a director who steers work to a connected supplier for personal gain can face repayment claims or legal action.

Three regimes that often catch directors off guard:

  • Health and Safety at Work etc. Act 1974. The director can be prosecuted personally where corporate offences are committed with their consent, connivance, or neglect.

  • UK GDPR and the Data Protection Act 2018. Directors are responsible for ensuring the company’s data processing is compliant. ICO enforcement actions name directors in serious breaches.

  • Bribery Act 2010. Section 7 creates a corporate offence of failing to prevent bribery. Directors who do not put adequate procedures in place can find the company prosecuted, with reputational consequences.

Key takeaways

  • Seven statutory duties under Companies Act 2006 ss.171 to 177

  • Reasonable care, skill, and diligence is the duty most often litigated

  • Duty to consider creditor interests engages when insolvency is real (BTI v Sequana)

  • Wrongful trading under IA 1986 s.214 can mean personal contribution orders

  • Filing failures can lead to disqualification under CDDA 1986

  • Personal guarantees survive insolvency

Frequently asked questions

What are the seven statutory duties of a UK director? Under Companies Act 2006, directors must act within powers (s.171), promote the success of the company (s.172), exercise independent judgement (s.173), exercise reasonable care skill and diligence (s.174), avoid conflicts of interest (s.175), not accept benefits from third parties (s.176), and declare interests in proposed transactions (s.177).

When does a director’s duty shift from shareholders to creditors? The duty engages when the company faces a real risk of insolvency, not only when formal insolvency proceedings start. The Supreme Court confirmed this in BTI 2014 v Sequana (2022).

What is wrongful trading? Under Insolvency Act 1986 section 214, wrongful trading is when a director allows a company to continue trading when they knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation. A director can be ordered to contribute personally to creditors.

Can I be disqualified as a director for late filing? Yes. Persistent failure to file accounts, returns, or tax filings is a recognised ground for disqualification under the Company Directors Disqualification Act 1986. Disqualification orders typically run between two and 15 years.

Do directors of small companies have the same duties as directors of large ones? Yes. The seven statutory duties in Companies Act 2006 apply identically to all directors of all UK companies, regardless of size, and the same legal duties also apply to executive and non-executive directors. The standard expected adjusts to reflect the role and the company, but the duties themselves do not.

Is this guide legal advice? No. This guide is general information only and not specific legal advice.

Useful resources

Companies Act 2006 https://www.legislation.gov.uk/ukpga/2006/46/contents

Companies House https://www.gov.uk/government/organisations/companies-house

Companies House filing guidance and email reminder service https://www.gov.uk/government/organisations/companies-house

Insolvency Service, Director information https://www.gov.uk/government/organisations/insolvency-service

Health and Safety Executive https://www.hse.gov.uk/

Information Commissioner’s Office https://ico.org.uk/