The Company Directors Role

If your SME were a Thespian production, playing at one of the leading Theaters of London’s West End, your director would be the star of the show. In this article we’ll explore the role and function of the company director, and then discuss how non executive directors can play a highly influential role in any small business.

As the name implies, a company director is responsible for guiding and directing the company and it’s workforce according to the rules and regulations set out within the articles of association. On a practical level, company directors will be responsible for setting a lot of internal policies within the company, as well as setting out a detailed and comprehensive business plan for the company and it’s employees to follow. While every director will take on a unique role according to the needs of the specific company, they will almost certain play a very large role towards the overall company strategy.

Here are some additional duties and responsibilities of the UK company director:

  • The director has an obligation to make decisions with the company well being in mind. The director is also legally obliged to declare any conflicts of interest between them and the company. This means informing the company about any dealings or transactions made on behalf of the company that would benefit them personally.
  • Oversee the correct preparation of financial accounts so that they represent a “true and fair” picture of the company and its trading activities.
  • Ensure the company is keeping sufficient historical records.
  • Communicate any substantial changes within the company to HMRC and Companies House.

A director has far more responsibility to the company, and answers more to the law than other non director employees who work within the company.

Next, we’ll talk about the role of “non executive directors”. Since the Higgs Report was commissioned in 2003, non executive directors have been allocated with a broad range of duties and characteristics to distinguish them from other company directors. Below are the key facts you need to know about non executive directors:

  •  Non executive directors are typically highly skilled and experienced individuals who are brought into a company to provide insight and to help steer the company in the right direction. Often, a non executive director also brings a lot of contacts and links that can help deliver growth and value to the business.
  • A non executive director still forms part of the overall board, but is not considered part of the company’s executive management team. They are also not involved with the day to day operational activities and duties carried out by the business.
  • The non executive director is often heavily influential in providing performance reviews for senior management and will provide an almost independent scrutiny on the risk and financial control models and safeguards that the company has in place.
  • Additional duties for the non executive director include succession planning (ensuring that senior management within the company are replaced adequately), and remuneration setting (providing guidance on suitable salary and bonuses for senior management according to their own and company performance).

A seasoned and experienced non executive director can provide sensational guidance for an up and coming SME.