Director’s Responsibilities: What You Must Legally Do in 2026
Director Responsibilities in 2026
Being a company director in 2025 means balancing opportunity with accountability. New transparency laws, including the Economic Crime and Corporate Transparency Act (ECCTA), now enforce stricter identity checks and data verification. With personal liability risks growing, understanding your legal obligations under the Companies Act 2006 and recent reforms is critical. This guide breaks down what you must do to comply and protect yourself.
Core Legal Duties Under the Companies Act 2006
The Companies Act 2006 outlines seven statutory duties for directors. Failure to meet these can lead to fines, disqualification, or criminal charges:
Act within your powers (e.g., follow the company’s constitution).
Promote the company’s success – prioritise long-term growth, considering employees, shareholders, and the environment.
Exercise independent judgment – avoid undue influence from stakeholders.
Avoid conflicts of interest (see Section 4).
Decline third-party benefits (e.g., gifts that compromise decisions).
Declare interests in proposed transactions – in writing to the board.
Exercise reasonable care, skill, and diligence – judged by both your experience and what’s objectively expected.
Key risk: Breaching these duties can invalidate decisions or lead to personal liability claims.
Financial Responsibilities: Avoiding Wrongful Trading
Under the Insolvency Act 1986, directors must monitor the company’s solvency. If insolvency is likely, you must:
Cease taking new credit.
Seek professional advice immediately.
Hold board meetings to document decisions.
Wrongful trading (continuing to trade while insolvent) can result in personal liability for debts and disqualification for up to 15 years.
Red flags for insolvency:
Persistent late payments to suppliers.
Overdue tax bills (e.g., VAT, PAYE).
Declining cash reserves.
Compliance Updates: ECCTA Requirements
The Economic Crime and Corporate Transparency Act (ECCTA) imposes fresh obligations from Autumn 2025:
Mandatory ID verification for all directors and Persons with Significant Control (PSCs). Existing directors have until Autumn 2026 to comply.
Enhanced transparency: Companies House can now reject filings with inconsistent data and share information with law enforcement.
Stricter penalties: Failure to verify IDs risks fines, prosecution, or dissolution of the company.
Action steps:
Register director IDs via the Companies House portal.
Review PSC registers annually for accuracy.
Managing Conflicts of Interest
Directors must declare any personal interest in company transactions (e.g., contracts with family businesses). Document these in:
Board meeting minutes.
A conflicts of interest register.
Example: If your spouse’s IT firm bids for a company contract, you must abstain from voting and disclose the relationship.
Consequences of Non-Compliance
Personal liability: Repaying company debts or compensating losses.
Disqualification: Banned from directing any UK company for 2–15 years.
Criminal charges: Fraudulent trading or withholding information can lead to prosecution.
2023–24 stats: Over 1,200 directors were disqualified for misconduct.
Practical Governance Tips for 2026
Adopt digital tools: Use board portals (e.g., Diligent) to track decisions and compliance deadlines.
Maintain records: Keep board minutes, shareholder resolutions, and financial reports for 10 years.
Annual compliance checklist:
File confirmation statements by deadline.
Update PSC registers.
Review Articles of Association for ECCTA alignment.
Need Help?
Navigating director duties in 2026 is complex. J-Benn Finance offers tailored compliance reviews, governance frameworks, and risk management support. Book a consultation to safeguard your role and company.
