As we move into 2026, the landscape for company directors is evolving rapidly. New compliance requirements, governance standards, and enforcement powers mean directors must stay informed to avoid personal liability and protect their businesses. Here’s what you need to know.
Core duties under the Companies Act 2006
The fundamental responsibilities remain unchanged:
- Act within your powers – follow the company’s constitution.
- Promote the success of the company – consider long-term growth, employees, and environmental impact.
- Exercise independent judgment – avoid undue influence.
- Avoid conflicts of interest – disclose and manage any potential conflicts.
- Not accept benefits from third parties – gifts or perks that could compromise decisions.
- Declare interests in transactions – in writing to the board.
- Exercise reasonable care, skill, and diligence – judged by both your experience and objective standards.
New compliance requirements
Under the Economic Crime and Corporate Transparency Act (ECCTA):
- Identity Verification: All directors must verify their identity with Companies House by Autumn 2026. Acting without verification can lead to unlimited fines and disqualification.
- Enhanced Transparency: Companies House will reject filings with inaccurate data and share information with enforcement agencies. Directors must ensure PSC registers and statutory filings are accurate and up to date.
Corporate governance code updates
From January 2026, boards must:
- Make a Declaration of Effectiveness of internal controls in annual financial statements.
- Explain how they monitor and maintain risk management frameworks.
- Strengthen reporting on culture, diversity, and inclusion.
Financial & insolvency duties
When insolvency looms, directors’ duties shift to prioritising creditors. Key risks include:
- Wrongful Trading: Continuing to trade when insolvency is inevitable can lead to personal liability for company debts.
- Misfeasance: Misuse of company assets or breach of fiduciary duties can result in litigation and disqualification.
ESG and risk management
Directors are expected to:
- Consider environmental and social factors in decision-making.
- Maintain robust compliance programmes to prevent fraud and financial crime.
Why this matters
Failure to comply can result in:
- Fines and criminal liability
- Disqualification for up to 15 years
- Reputational damage and shareholder claims
Q and A’S
1. What happens if a director fails identity verification?
They cannot legally act as a director. Continuing to do so may result in unlimited fines, criminal liability, and disqualification.
2. Do directors need to consider ESG factors in 2026?
Yes. Boards are expected to integrate environmental, social, and governance considerations into decision-making and reporting.
3. When do directors’ duties shift to creditors?
As soon as insolvency is likely or unavoidable, directors must prioritise creditors’ interests over shareholders.
4. What is the Declaration of Effectiveness?
From January 2026, boards must confirm the effectiveness of internal controls in their annual financial statements under the UK Corporate Governance Code.
5. Can directors be personally liable for company debts?
Yes, in cases of wrongful trading, misfeasance, or breach of fiduciary duties during insolvency.
How Stephensons can help
Navigating these changes requires proactive legal advice. Our team can:
- Review your governance framework.
- Advise on compliance with ECCTA and identity verification.
- Support directors facing financial distress or potential insolvency.
Contact us today on 0161 696 6170 to speak with our specialist solicitors.
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