For an owner-managed company which has only one or two directors and no employees, decisions will often be made informally and the resulting action performed by the same individuals. Ideally such decisions should be recorded as a board minute but this is not always possible.
In larger companies there may be more a structure to the business, with very junior or unskilled staff reporting to team leaders, who in turn may report to managers and senior managers (who will report to the directors) as is necessary to run the company.
What is most important is that directors maintain a close control of the company and ensure that there are reporting lines which, on important matters, eventually lead to the necessary information being provided to directors either for management information purposes or for approval.
Directors have a fiduciary duty to the shareholders of the company to ensure they promote the interests of the company. However, they also have non-fiduciary duties which extend to third parties in certain circumstances (most particularly creditors and the public at large) which require that they do not distance themselves from inappropriate or improper behaviour.
Directors’ duties were codified by Sections 171-177 of the Companies Act 2006, although these have been interpreted by case law oth prior to and since this legislation was introduced. Broadly speaking, a director has a duty to ensure that he continues to promote the success of the company, does not act in conflict with his own interests and performs his role to a requisite standard (which may be raised dependant on his/her skills and experience).
