The Responsibilities of Directors

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By Chris Cunnane, Lecturer

3 October 2016

Business Law is relevant throughout the CA qualification as well as your post-qualification career. Use our mnemonic to get back to basics on director’s responsibility, as explained by Chris Cunnane, Lecturer.

The responsibilities of a company director are often tested as part of TC Business Law exam, and they are also worth remembering for the TPE case study. The Companies Act sets out seven duties which a director has to the company. Here is a quick mnemonic based on TV shows to help you remember what they are: CSI and Bart from The Simpsons.

A director of a UK limited company must:


  • Company Constitution: follow the company’s rules, shown in its Articles of Association and make decisions for the benefit of the company, rather than themselves
  • Success: try to make the company a success and act fairly between members, and a range of other stakeholders, such as employees, suppliers, the environment, the general community and creditors
  • Independent judgement.


  • Benefits: do not accept from 3rd parties
  • Avoid conflicts of interest
  • Reasonable skill and care: act using their skills and experience. If a director has a professional qualification, a higher standard of care will be expected
  • Transactions: tell other shareholders if they might personally benefit from a transaction the company makes

Directors are also responsible for the preparation of the accounts and the report of the directors. It is up to the directors to ensure that the company maintains full and accurate accounting records.

This includes the preparation of a balance sheet and a profit and loss account for each financial period of the company, and the presentation of these to shareholders. They will also usually file accounts and report with the Registrar of Companies.

Directors can hire other people to manage some of these things on a day-to-day basis (e.g an accountant), but they are still legally responsible for the company’s records, accounts and performance.

Directors may be personally liable for the company’s business liabilities and be fined, prosecuted or disqualified as a company director if they do not follow the rules.


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