Sport professional turned business owner - the role of a company director
Starting your own business alongside your competitive career can be a great way to set yourself up for a successful transition. But can you safely leave it the company’s business to someone else while you focus on your game? Karen Ozdamar, corporate lawyer, sets out some frequently asked questions about being a director of a limited company.
What does a director do?
The directors of a company manage the company’s business and make sure that the company meets its legal obligations. The board of directors takes all of the major decisions about the company’s operations and strategy and as a director you would be responsible for your part in that.
What obligations do I take on by becoming a company director?
A director of a company owes certain duties to that company. The seven general statutory duties of company directors are:
- to act within powers
- to promote the success of the company
- to exercise independent judgment
- to exercise reasonable care, skill and diligence
- to avoid conflicts interest between the director’s interests and the company’s interests
- not to accept benefits from third parties
- to declare any interest in a proposed transaction or arrangement
You should also consider the interests of the company’s creditors and keep the company’s affairs confidential.
What if I breach my duties as a company director?
You are expected to keep yourself informed about what is going on in your company. It is dangerous to turn a blind eye, particularly to the company’s financial situation. You are not generally responsible for the actions of other directors if you knew nothing about them and took no part, but you could be held personally liable for losses resulting from illegal acts, acting beyond your powers or failing to use sufficient care and skill.
Do I need to attend board meetings?
In practice, the directors of a company will need to have at least one board meeting each year to approve the company’s annual accounts. Additional board meetings will be required whenever a significant decision is to be taken, which requires board approval. It is often possible to hold board meetings over the telephone, though this will depend upon the provisions of the company’s articles of association.
Do I have to give my residential address to Companies House?
Yes, if you want to be a director you will have to give your address to the central companies’ registry, Companies House. But you can arrange for it to be kept from the general public. In certain circumstances, Companies House can disclose a director’s residential address to public authorities such as the police and HMRC, and to credit reference agencies.
What if I don’t want to be a director of a specific company anymore?
If there is nothing in the company’s articles of association or your service contract with the company about retiring as a director (if you have a service contract), you can generally resign at any time by giving notice to the company. Remember though that resigning as a director does not allow you to walk away from problems that occurred while you were a director. If you continue to exert influence over the board after your resignation, you could still be liable in legal proceedings if the courts treat you as a “shadow director”.
Can my lawyers deal with the administrative tasks for me?
No matter who you are, you will be expected to understand the legal documents that you have signed. Your lawyer can explain the implications of anything that you might need to sign in the context of your business or personal dealings, and can deal with most administrative tasks for you. But if you become a company director, you need to make sure you comply with your duties to the company – as you will be held to account for them.
Howard Kennedy acts for a significant number of sportsmen and women and we understand the sports industry from both a legal and commercial perspective. We are here to help you with issues that affect your business and personal life.
Get in touch with Karen Ozdamar for more information on how being a company director could affect you.