Director vs Shareholder

Difference between a director and shareholder

It is very important to understand the differences.

Directors are officers of the company and should be managing the company on a day-to-day basis, making the decisions for the benefits of the shareholders. Directors are responsible for meeting all the filling deadlines with Companies House and HM Revenue & Custom. In some instance, directors may be personally liable for debts they accrue in the company name.

Duties of directors as per The Companies Act 2006

  • To act within powers in accordance with the company’s with the company’s constitution and to use those powers only for the purpose for which they were intended
  • to promote the success of the company for the benefit of its shareholders
  • to exercise independent judgment, reasonable care, skill and diligence
  • to avoid conflict of interest
  • not to accept benefits from other parties

A shareholder is someone who owns shares in a company and has rights to income, to vote and to share of the sales value of the company in case it’s sold.

Shareholders appoint directors to run the company on their behalf.

Some key decisions have to be made by shareholders but most decisions required for the day-to-day running of the company will be made by the directors.

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