What are the specific legal responsibilities of directors in UK public limited companies (PLCs)?

11 June 2024

All companies, whether they are public or private, limited or unlimited, have a corporate structure that includes a board of directors. These individuals hold a significant role within the company, carrying out a wide range of duties crucial to the company’s operations and growth. However, the role of a director is not just about making strategic decisions, it also involves a myriad of legal responsibilities. Particularly in public limited companies (PLCs) in the UK, the director’s legal obligations are strictly regulated and carry significant consequences if not adhered to.

Before delving into the intricacies of these legal responsibilities, it is important to understand what a PLC is and what differentiates it from other types of companies.

Public Limited Companies (PLCs)

Public limited companies represent a specific type of business. Unlike their private counterparts, PLCs are allowed to offer shares to the general public and can list these shares on a stock exchange. This potential for a wider pool of shareholders and greater capital makes PLCs a popular choice for larger businesses.

However, with this potential comes a greater degree of legal and financial scrutiny. Due to the nature of PLCs, directors' duties and responsibilities are monitored closely to ensure they act in the best interests of the company and its members.

Legal Responsibilities of Directors

As the stewards of a company, directors are endowed with a range of legal responsibilities. These are enshrined in UK law, specifically under the Companies Act 2006. These statutory duties are designed to ensure directors act in a way that is beneficial to the company, its shareholders, and the public.

Duty to Act within Powers

As a director, you are obliged to act within the powers granted to you by the company's constitution. This means that you must comply with the company’s Articles of Association, a document which outlines the company's purpose, and the internal rules that govern and guide the company and its directors. Any action that falls outside these powers could be deemed unlawful.

Duty to Promote the Success of the Company

A crucial responsibility for directors is the duty to promote the success of the company. When making decisions, directors must consider the long-term consequences, the company’s reputation, the interests of the shareholders, and the impact on the community and environment.

Duty to exercise Independent Judgment and Reasonable Care, Skill, and Diligence

Directors are expected to exercise independent judgment and not allow their decisions to be swayed by external influences. This means making decisions based on what they truly believe is in the best interest of the company. In addition, directors must also exercise the same care, skill, and diligence that a reasonable person would exercise in their position.

Duty to Avoid Conflicts of Interest

Directors are required to avoid situations where they have, or could have, a direct or indirect interest that conflicts, or potentially may conflict, with the interests of the company. This includes not exploiting any business opportunities of the company for personal gain.

Duty Not to Accept Benefits from Third Parties

Finally, directors are not allowed to accept any benefit (including bribes) from a third party conferred because of their position as a director, or for doing (or not doing) anything in their capacity as director.

Consequences of Breaching Legal Duties

Breaching these duties can lead to serious consequences. For instance, you could be held personally liable for any loss to the company resulting from your breach of duty. In severe cases, you could be disqualified from acting as a director of a company.

Directors of PLCs are also liable under criminal law for certain actions such as fraudulent trading or false accounting. These offences could lead to a fine or even imprisonment.

Understanding Director's Responsibilities in Practice

While understanding the legal responsibilities of a director is important, it is equally crucial to understand how these are implemented in practice. For example, the duty to act within your powers may require you to regularly review the company’s constitution to ensure you are not stepping beyond your authority.

Understanding your responsibility to promote the success of the company may involve meeting regularly with shareholders, taking their views into account and keeping them informed about the company's performance.

In order to fulfil your duty to exercise reasonable care, skill, and diligence, you may need to devote sufficient time to understand the company’s affairs and keep up-to-date with industry developments.

Avoiding conflicts of interest could involve declaring any personal interests you have that may conflict with the company's interests. You should also avoid using company property or information for personal gain.

The duty not to accept benefits from third parties may require you to put policies in place for dealing with offers of gifts or hospitality, and setting a high standard of integrity and ethical conduct.

In essence, being a director of a PLC in the UK is a role that comes with a significant weight of responsibility. As such, it is crucial that you are fully aware of your legal responsibilities and how to fulfil them.

The Role of the Company Secretary in PLCs

In the realm of public limited companies, directors aren't the only individuals who shoulder significant responsibilities. The company secretary too, has an essential role in the administration of a PLC. The Companies Act 2006 does not necessitate PLCs to have a company secretary, yet, most choose to appoint one due to the extensive obligations that come with being a PLC.

The company secretary is often seen as the chief administrative officer of the company, ensuring compliance with statutory and regulatory requirements. This includes maintaining the company's registered office, handling the reporting of financial information to the Companies House, and ensuring that the board’s decisions are implementable and within the company's Articles of Association.

In terms of the relationship with directors, the secretary frequently acts as a link between the board and the company. They are responsible for organising board meetings, circulating relevant documents and reports ahead of these meetings, and subsequently recording the minutes.

The company secretary also plays a critical role in relation to the company's shareholders. Duties here include managing share allotments, transfers and issues, as well as dividend payments to shareholders. They are responsible for maintaining the company's statutory books, which include the register of directors and secretaries, the register of shareholders and the register of charges.

In summary, while the company secretary may not have the same legal responsibilities as directors, their role in ensuring governance and compliance within a PLC is crucial.

Company Formation and Share Capital

The formation of a PLC in the UK is a process governed by the Companies Act 2006. This process involves several steps, one of which is the registration of the company with the Companies House. The company must have a registered office within the UK, a unique company name and the Articles of Association.

One distinguishing feature of PLCs is the requirement for share capital. In order to register a PLC, a minimum share capital of £50,000 is required. This means that the company must have issued shares to the value of at least £50,000, and at least 25% of this must be paid up.

The shares of a PLC are offered to the general public, which is a defining difference between public companies and private limited ones. The shares can be bought and sold freely on the stock exchange, allowing the company to raise significant funds. However, this also means that the company is subject to rigorous financial scrutiny and has a duty to maintain transparency with its shareholders, the stock exchange, and the wider public.

Bear in mind, it is the duty of the company directors to ensure that the company follows these requirements. Failure to meet these obligations could result in penalties, including fines or disqualification as a company director.


Being a director of a PLC in the UK is a role that comes with numerous legal responsibilities to the company, its shareholders, and the public at large. These duties range from acting within the powers granted by the company's constitution, to promoting the success of the company and avoiding conflicts of interest.

It's also vital to appreciate the role of the company secretary, who, while not having the same legal obligations as the directors, is indispensable in ensuring good governance and compliance within the PLC.

The formation of a PLC and the requirement for share capital brings its own set of responsibilities and potential challenges. However, taking the time to understand these duties, adhering to them, and prioritising transparency and ethical conduct at all times, can help ensure that you navigate the world of PLCs successfully and confidently. Remember, while the role carries significant responsibilities, it also brings the potential for great reward.

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