A UK company director has seven codified statutory duties under the Companies Act 2006, sections 171-177. Each duty is owed to the company itself, breach can trigger personal liability, and "I didn''t know" is rarely a defence. The most consequential in practice: the section 172 duty to promote the success of the company, having regard to long-term consequences, stakeholders, and reputation.

This guide walks through each duty in practical terms — what it actually requires day-to-day, where it''s commonly breached, and how to evidence compliance.

Section 171 — duty to act within powers

A director must act in accordance with the company''s constitution and only exercise powers for the purposes for which they are conferred.

In practice:

• Read the Articles of Association. Most directors haven''t.
• Don''t exercise powers (e.g. share issuance, dividend declaration, asset disposal) outside what the Articles authorise.
• Don''t use a power for the wrong purpose — e.g. issuing shares specifically to dilute a troublesome shareholder is improper use of the allotment power.

Common breach: a director using a casting vote or capital decision in a way that benefits themselves at the company''s expense.

Section 172 — duty to promote the success of the company

A director must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

• the likely consequences of any decision in the long term;
• the interests of the company''s employees;
• the need to foster business relationships with suppliers, customers and others;
• the impact of the company''s operations on the community and the environment;
• the desirability of the company maintaining a reputation for high standards of business conduct;
• the need to act fairly as between members of the company.

This is the headline director duty. In practice:

• "Success of the company" means long-term value, not just this quarter''s profit.
• The six factors aren''t a checklist to complete on every decision — they''re the lens through which decisions should be assessed.
• Larger companies (over 250 employees and £36m turnover, broadly) must publish a section 172 statement in their strategic report.
• Standard board minutes for material decisions should explicitly note section 172 considerations.

Common breach: a director optimising short-term financial metrics with full knowledge of long-term harm — most often when an external buyer or PE house is influencing decisions to inflate valuation for sale.

Section 173 — duty to exercise independent judgement

A director must exercise independent judgement.

In practice:

• You can take advice — from co-directors, lawyers, accountants, consultants — but the decision is yours.
• You can''t simply defer to "what the founder wants" or "what the parent company decides".
• This duty matters most for non-executive directors and directors on subsidiary boards.

Common breach: a director nominated by a major shareholder simply voting whatever the shareholder instructs, without independent consideration.

Section 174 — duty to exercise reasonable care, skill and diligence

A director must exercise reasonable care, skill and diligence — being the care, skill and diligence that would be exercised by a reasonably diligent person with both: (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and (b) the general knowledge, skill and experience that the director has.

Dual test. Two implications:

• You''re held to the standard expected of someone in your role — not the standard of "a typical director" generically.
• If you have specific expertise (you''re a former accountant, an engineer, a lawyer), you''re held to that higher standard in your area.

Common breach: an accountant-director failing to spot obvious financial irregularities a non-finance director might be excused for missing.

Section 175 — duty to avoid conflicts of interest

A director must avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

In practice:

• You can''t take an opportunity that came to the company personally — even after you''ve resigned from the board, if the opportunity came to you while you were a director.
• You can''t have a competing interest (a stake in a competitor) without proper authorisation.
• This duty applies even after you cease to be a director, in respect of opportunities or information that came to you during the directorship.
• The duty can be authorised away by the board (subject to constraints in the Articles) — and many private companies'' Articles include broader authorisations.

Common breach: a director with side businesses where the same customer or supplier overlaps, without disclosure or authorisation.

Section 176 — duty not to accept benefits from third parties

A director must not accept a benefit from a third party conferred by reason of: (a) their being a director, or (b) their doing (or not doing) anything as director.

In practice:

• Routine corporate hospitality is fine — the line is at "material benefit that could reasonably be regarded as giving rise to a conflict".
• The duty cannot be authorised away by the board (unlike section 175).
• Anti-bribery legislation (Bribery Act 2010) sits alongside this duty.

Common breach: a director accepting a significant gift or fee from a supplier or customer that''s tied to the company relationship.

Section 177 — duty to declare interest in proposed transactions

A director must declare to the other directors the nature and extent of any interest in a proposed transaction or arrangement with the company.

In practice:

• Declaration must happen BEFORE the transaction is entered into.
• Specific (not general) — the nature and extent of the interest.
• Recorded in board minutes.
• If you have an interest in an existing transaction (not just a proposed one), section 182 (criminal offence to fail to declare) applies.

Common breach: a director failing to declare that a proposed contract with a supplier is with the director''s spouse''s business, or with a company in which the director has a hidden interest.

How breach is enforced

If a director breaches one or more of these duties, the consequences:

• Civil action by the company for breach of duty — typical remedies include damages, account of profits, restitution, rescission of a contract.
• Action by a liquidator on insolvency — wrongful trading (s214 Insolvency Act 1986) and fraudulent trading (s213) often piggyback on breach of section 172 or 174.
• Derivative action by shareholders — minority shareholders can sue in the company''s name where the board won''t.
• Director disqualification (Company Directors Disqualification Act 1986) — for serious or repeated breaches, the court can disqualify for 2-15 years.

There is no "I forgot" or "I didn''t know" defence in most cases.

How to evidence compliance

For each material decision the board takes:

• Minutes that record what was considered, the section 172 factors weighed, and any conflicts declared.
• A paper trail of advice taken — when you rely on professional advice (legal, accounting, technical), keep it.
• A register of directors'' interests — kept current, reviewed at every board meeting.
• Articles of Association that authorise the discretion the board exercises — and where they don''t, separate shareholder resolutions.

For one-person and two-person companies, this discipline often feels heavy. The minimum: dated written notes of significant decisions, with the reasoning that supports them. When something goes wrong years later (and at some companies it does), the contemporaneous record is the difference between defensible and indefensible.

What to do this month

• Read your company''s Articles of Association if you haven''t.
• Set up a Register of Directors'' Interests — a simple document listing each director''s relevant interests, kept current.
• For your next material board decision, write minutes that explicitly reference the section 172 factors weighed.
• If you have side business activities, confirm they''re disclosed and authorised in the way the Articles require.