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In a limited company, an alternate director is a specified person who substitutes for a principal director when they are unable to attend a board meeting or are absent for an extended period of time. During their temporary appointment, they have the same authority as the director for whom they are ‘standing in’.
Let’s explore this topic in more detail to understand the purpose and role of an alternate director, their rights and responsibilities, and how to appoint an alternate to act on your behalf in your absence.
What is the purpose and role of an alternate director?
The purpose and role of an alternate director is to stand in for a principal director who, for whatever reason, cannot attend a board meeting or carry out their directorship duties for a period of time.
When we talk of a principal director, we are referring to one of the main directors who is a member of the board and who normally runs the company.
Once appointed, the alternate director is (usually) granted the same powers as the absent director. This includes attending and speaking at board meetings and voting on company resolutions.
There are many situations where an alternate may be required, but the most common situations are when a principal director is:
- unwell or on extended sick leave
- on vacation
- on parental leave (e.g. maternity, paternity, adoption)
- taking a sabbatical
- on bereavement leave
- travelling for work
The option to appoint an alternate director is incredibly useful for any short-term or extended period of absence of a board member.
However, there is no statutory requirement to appoint an alternate director. It is entirely optional and at the discretion of the company members (shareholders/guarantors) whether to include provisions for such appointments in the company’s articles of association.
In companies with multiple directors, the appointment of an alternate is often unnecessary. Generally, the remaining directors are capable of running the company in one director’s absence, as long as there are enough directors to meet the quorum for board meetings.
An alternate director is more often used in smaller companies with sole directors, or a board consisting of only two or three people. In such instances, the absence of one director could have a significant impact on the smooth running of the business.
What rights and responsibilities do alternate directors have?
Generally, they have the same rights and responsibilities as the principal director for whom they are covering.
As such, they should be up to date with the company’s affairs and the powers and duties of the absent director. This will ensure as seamless a transition as possible, if and when the need arises.
Typically, an alternate director has the right to:
- call board meetings
- attend and speak at board meetings, whether in person or virtually
- raise concerns and discuss business strategies
- propose resolutions
- vote on proposed resolutions
- receive copies of minutes of meetings
- file accounts, confirmation statements, and tax returns
- report changes to Companies House
In some instances, a company’s articles may restrict the authority of alternates by omitting certain powers normally granted to the principal director.
Alternate directors are also legally responsible for any actions they take during their appointment. They must act in accordance with the statutory general duties of directors set out in the Companies Act 2006. Failure to do so can lead to disqualification or prosecution.
They are not proxies acting on the instruction of the absent director. Alternate directors are expected to exercise care, use sound judgment, and make their own decisions for the benefit of the company and its members.
Who can and cannot be appointed to the role?
Eligibility requirements for alternate directors are exactly the same as those which apply to all director appointments.
You can appoint an individual person aged at least 16 years old or a corporate body, e.g. another company – provided the company approves the appointment.
However, certain statutory restrictions apply. You cannot appoint any person who is:
- banned from being a company director under the terms of a director disqualification order
- under the restrictions of bankruptcy (an ‘undischarged bankrupt’) or a Debt Relief Order
- the auditor of the company
In limited circumstances, the court may waive such conditions for a particular individual.
The company’s articles may also include additional restrictions on who can be appointed as an alternate director. You should check this important document in the first instance.
Are they permitted under the Model articles?
You may only appoint an alternate director if the company’s articles provide this right. However, the Model articles from Companies House, which many private companies choose to adopt, make no mention of alternate directors.
If you wish to allow the appointment of alternate directors in your company, you will need to amend your articles by including a provision that gives directors the right to appoint an alternate in the event of their absence.
To amend the articles of association, the company’s members must pass a special resolution to approve such changes
Are alternate directors registered at Companies House?
If you appoint an alternate director, you must notify Companies House within 14 days. To do so, you will need to file Companies House form AP01 (to appoint an individual person) or form AP02 (to appoint a corporate body), either online or by post.
Their details will then be placed on the public register under the company’s official listing. For this reason, we always advise against using a home address as a director’s service address.
Do their details have to be entered in the register of directors?
Upon appointing an alternate director, you must enter the following details in your company’s statutory register of directors:
- Title (Ms, Mrs, Mr, etc.)
- Forename(s) and surname
- Former name(s), if any, used for business purposes in the past 20 years
- Main residential address
- Service address (aka correspondence address)
- Month and year of birth
- Date of appointment as an alternate director
- Country, state, or UK nation in which they normally live
- Occupation (optional)
When their temporary appointment comes to an end, you will need to enter the termination date of their directorship in the register.
Generally, a company will keep all of its statutory registers at its registered office address, where they must be made available for public inspection upon request.
How to appoint an alternate director
In most companies, the members will need to pass a special resolution to approve the appointment of any new director. This type of resolution can be proposed and passed at a general meeting or in writing.
However, some companies grant additional powers to directors in the articles of association, allowing such decisions to be made without the involvement of members. Therefore, always check the articles to determine your company’s specific rules and procedures.
Either way, the principal director who requires an alternate will usually have to approve their temporary replacement.
To formally appoint an alternate director, you must inform Companies House within 14 days of the date on which they assume the role. You can do this in four ways:
- Via Rapid Formations’ free Online Client Portal
- Using our Director Appointment Service
- Online via Companies House WebFiling service
- Downloading and printing form AP01 or form AP02 and sending it by post to Companies House
If you choose to file online (the quickest and easiest option), the appointment request will be delivered immediately. If approved, Companies House will record the alternate director’s details on the public register within approximately 48 hours.
For more detailed guidance on the process, read our post on appointing a new company director.
How to remove one
The principal director can remove their appointed alternate at any time, whether before or upon their return to the company.
To do so, the members or directors should pass a resolution to formally authorise the termination of the alternate director’s appointment.
Companies House must be informed within 14 days of the date of the alternate’s removal. You can do this online or by post using Companies House form TM01, or via Rapid Formations’ free Online Client Portal or Director Resignation Service.
Companies House will update the public register to reflect the termination of the appointment. The company must also update its statutory register of directors with the date on which the alternate ceased being a director.
If the principal director ceases to hold office during the alternate director’s appointment, the alternate is also removed from their role.
You should now have a clear understanding of the purpose and role of an alternate director, including when you might require one, their rights and responsibilities, and how to appoint an alternate to act on behalf of a principal director in the event of their absence.
If you have any questions about this topic or would like to find out more about our director appointment and resignation services, please leave a comment below or contact our company formation team.