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Directors Differences Between Directors and Managers

Directors have ultimate responsibility for the long-term prosperity and strategic direction of the company, while managers are responsible for implementing the board's decisions and policies on a day-to-day basis. Directors are accountable to shareholders, have fiduciary duties, and can face personal liability or disqualification for failure to comply with legal obligations. In contrast, managers do not have the same legal responsibilities and are accountable to directors rather than shareholders.

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119 views

Directors Differences Between Directors and Managers

Directors have ultimate responsibility for the long-term prosperity and strategic direction of the company, while managers are responsible for implementing the board's decisions and policies on a day-to-day basis. Directors are accountable to shareholders, have fiduciary duties, and can face personal liability or disqualification for failure to comply with legal obligations. In contrast, managers do not have the same legal responsibilities and are accountable to directors rather than shareholders.

Uploaded by

Yang Xiao Xiao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Directors – Key Differences between Directors and

Managers
There are many fundamental differences between being a director and a manager. It is not simply a trivial matter of getting a
new job title and a bigger office. The differences are numerous, substantial and quite onerous. The table below outlines the
major differences between directing and managing.

Directors Managers
Leadership It is the board of directors who must provide the intrinsic It is the role of managers to carry
leadership and direction at the top of the organisation; establish through the strategy on behalf of
and maintain its vision, mission and values. the directors.
Decision making Directors are required to determine the future of the Managers are concerned with
organisation, its strategy and structure and protect its assets and implementing the decisions and
reputation. They also need to consider how their decisions the policies made by the board.
relate to ‘stakeholders’ and the regulatory framework.
Stakeholders are generally seen to be the company’s
shareholders, creditors, employees, customers, and increasingly,
a community in which it operates.
Duties and Directors, not managers, have the ultimate responsibility for the Managers have far fewer legal
responsibilities long term prosperity of the company. Directors are required in responsibilities. See FactFile
law to apply skill and care in exercising their duty to the Information Sheet The Duties,
company and are subject to fiduciary duties. If they are in Responsibilities and Liabilities of
breach of their duties or act improperly, directors may be made Directors.
personally liable in both civil and criminal law. On occasion,
directors can be held responsible for acts of the company.
Directors also owe certain duties to the stakeholders of the
company as listed above.
Relationship Directors are accountable to the shareholders and other Managers are usually appointed
with stakeholders for the company’s performance and can be and dismissed by directors or
shareholders removed from office by them or the shareholders can pass a management and do not have any
special resolution requiring the directors to act in a particular legal requirement to be held to
way. Directors act as ‘fiduciaries’ of the shareholders and should account.

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act in the best interests of the company (as a separate legal
entity).
Ethics and Directors have a key role in the determination of the values and Managers must enact the ethos,
values ethical position of the company. taking their direction from the
board.
Company Directors are responsible for the company's administration. While the related duties associated
administration with company administration can
be delegated to managers, the
ultimate responsibility for them
resides with the directors.
Statutory If a company becomes insolvent, the Insolvency Act 1986 (as These statutory provisions do not
provisions on amended) imposes various duties and responsibilities on affect managers.
insolvency directors that may involve personal liability, criminal prosecution
and disqualification.
Statutory There are many other statutory provisions that can create Generally managers are not held
provisions in offences on strict liability under which directors may face responsible under the statutory
general penalties if the company fails to comply. A very wide range of provisions; one exception will be
statutes impose duties on directors which are too numerous to the Corporate Manslaughter and
refer to here but include duties under the Companies Act 2006, Corporate Homicide Act 2007
Health and Safety Legislation (a breach of which is a criminal which refers to management at a
offence) including the Corporate Manslaughter and Corporate senior level. As well as directors
Homicide Act 2007. this could include the most senior
managers.
Disqualification Directors can be disqualified as directors under the Company The control over the employment
Directors Disqualification Act. of a manager rests with the
company.

Acknowledgement: This FactFile Information sheet has been obtained from the Institute of Directors (IoD) and is reproduced
with its permission. Further reproduction, copying, distribution or use in any other context in whatever media is prohibited
without prior permission from the IoD.

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