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Chapter 2 of Part 10 of the Companies Act 2006 codifies the general duties of directors. Section 171 requires a director to act within powers. Section 172 is the duty to promote the success of the company. Section 173 requires independent judgment, and section 174 reasonable care, skill and diligence. Sections 175 to 177 deal with conflicts of interest, benefits from third parties and declaring an interest in a proposed transaction.

These are personal duties owed to the company, not to shareholders individually, and section 178 sets out the civil consequences of breach. Directors of small companies often assume the duties are corporate boilerplate for large boards. They are not; they apply from the first day of appointment and they are what a liquidator or a disgruntled co-shareholder will point to.

Incorporation itself is quick and cheap, which is why people do it without advice. The consequences arrive later: the company has its own legal personality, its own money that is not yours, and a public record that customers, lenders and competitors can read.

Ongoing obligations include confirmation statements, annual accounts, and keeping the register of people with significant control accurate. Changes of director, registered office and share capital have to be notified. Late or missing filings carry penalties and, more practically, they are the first thing a prospective buyer or lender notices when looking at the register.

The classic small-company dispute is a 50-50 shareholding with no agreement about what happens if the two owners stop agreeing. Nothing in the default articles breaks a deadlock, and the remedies available are slow and expensive. A short agreement with a deadlock clause and a valuation mechanism prevents most of it.

Second is the customer who does not pay. Chasing it is a civil claim like any other, and the paperwork you created at the start, signed terms, evidence of delivery, a clear payment date, largely determines whether it is straightforward or a fight. Third is the departing founder who wrote code, designed a brand or built a client list without ever assigning the rights to the company.

Company law is UK-wide, but the law governing a contract is not automatically. A contract governed by Scots law has its own rules on formation, on interpretation and on remedies, and a Scottish partnership has separate legal personality in a way an English partnership does not. Security over assets, leases and debt enforcement all work differently north of the border.

In practice, if you trade across the UK, the governing law and jurisdiction clause in your standard terms is doing real work. Decide it deliberately. A business in Cardiff with customers in Aberdeen and Belfast should know which court it will end up in before it needs to find out.