A Director's Service Agreement is different from a standard employment contract. Here's what it needs to cover and why.
If you are appointing a director to a UK limited company, a Director's Service Agreement (DSA) sets out the terms of their appointment. It is different from a standard employment contract because a director has both statutory duties under the Companies Act 2006 and contractual obligations under the agreement.
A director has fiduciary duties to the company -- including the duty to act in good faith, to avoid conflicts of interest, and not to accept benefits from third parties. These duties exist under the Companies Act 2006 regardless of what the contract says. A DSA reinforces these duties contractually and adds practical provisions specific to directors. A director may also be an employee (an executive director) or may serve in a non-executive capacity. The DSA should reflect which applies.
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