Directors

What is a company director?

A company director is a person who is appointed to run a company on behalf of its members (shareholders or guarantors). They are legally responsible for the company and its actions, attempting to make it a success, and ensuring all legal administrative functions are maintained. Often, directors are also members.

Who can be a company director?

Almost any individual can be a company director, provided they

• are at least 16 years old
• are not under bankruptcy restrictions or prohibited by a Debt Relief Order
• have not been disqualified (banned) from acting as a company director

Currently, companies can be appointed as 'corporate' directors of other companies, but the government has plans to ban this in the near future.

How many directors do I need to set up a limited company?

Under the Companies Act 2006, a UK limited company requires at least one natural person (i.e., human, not corporate) to be appointed as a director when a company is incorporated and for its entire existence.

The company's articles may specify a higher minimum, and there is no statutory limit to the maximum number of directors a company has.

Do I have to live in the UK to become a director?

There is no legal requirement to be a UK citizen or live in the UK to be a director of a UK limited company. However, in some cases, a non-resident director may still have to pay tax in the UK on any earnings received from the company.

Can a director be another company?

Currently, a company or other corporate body can be the director of another company, but it cannot be the only director. There must be at least one natural (human) director appointed at all times.

The UK government is planning to implement a ban on corporate directors, legislated under the Small Business, Enterprise and Employment Act 2015. As yet, no date has been given for the enforcement of this ban.

Does a director have to be a shareholder in the company?

Unless it's a requirement under the articles of association, a director does not have to be a shareholder in the company they run, nor does a shareholder have to be a director. However, they can be, and it is quite common for directors and shareholders to be the same people, especially in smaller companies.

Does a director own the company?

A director does not own the company. Shareholders (members) own the company by taking shares, and directors run the company on behalf of these members. These are two very distinct roles, but it is commonplace for directors to also be shareholders.

What are the main responsibilities of a director?

A director is responsible for running a company honestly and lawfully, in accordance with the Companies Act 2006 and the articles of association. This includes managing day-to-day business activities and finances, making decisions for the benefit of the company and members, and fulfilling all legal administrative functions, like filing accounts and confirmation statements.

Can I appoint a new director after company formation?

You can appoint a new director any time after company formation, in line with the articles of association. Typically, existing directors can approve the appointment, but sometimes the articles restricts this power to members. There is usually no upper limit to the number of directors that can be appointed, unless a specific provision is added to the articles.

Can I remove a director from my company?

Depending on the circumstances, a director can be removed from a company by a majority vote of the members (or directors, if permitted by the articles) or disqualified by the court or a governing body if deemed 'unfit'. Any removal must be in line with the director's contract and/or shareholders' agreement, otherwise they may be entitled to damages.

How do I change a director’s details?

If a company director’s details change during their appointment, you must file form CH01 (or form CH02 for a corporate director) at Companies House within 14 days. You can complete and submit the form via Companies House online services or Rapid Formations free Online Client Portal.

How do I appoint a company director?

Typically, company members need to pass an ordinary resolution to appoint a company director. Within 14 days of the appointment, Companies House must be notified on form AP01 (or form AP02 for a corporate director), which you can file through Companies House online services or Rapid Formations free Online Client Portal, or by purchasing our Director Appointment Service.

Companies House will publish details of the appointment (including details of the director) on the public register. You will also need to record the new appointment in the company’s register of directors and store the members’ resolution with your company records.

How do I remove a company director?

If you remove a company director (individual person or corporate body) for any reason, you must inform Companies House within 14 days of the termination using form TM01. This form can be completed and filed through Companies House online services or Rapid Formations free Online Client Portal, or by purchasing our Director Resignation Service.

Details of the termination will be published on the public register. You must also update the company’s register of directors with the effective date of termination.

Can I be a director of more than one company?

Under UK company law, you can be a director of more than one company at a time, unless you are prohibited from doing so under the terms of any of your contracts. In accordance with the Companies Act 2006, you must also ensure that you’re able to exercise “reasonable skill, care and diligence” and avoid conflicts of interest across all appointments.

Change I change a director’s date of birth?

If the wrong date of birth has been incorrectly stated for a director, you can correct the mistake by filing form RP CH01 at Companies House. You will also need to submit form RP02a to rectify the incorrect entry on the public register. Both of these forms can be completed through Companies House online service.

Can a company have only one director?

Private limited companies may have only one director, on condition that the director is a natural person (a human, rather than a corporate entity) and the articles of association do not prescribe a higher minimum. However, public limited companies must always have two directors.

Do I need certain qualifications to be a company director?

The law does not require you to obtain any qualifications to be a company director. However, being a company director comes with a great deal of responsibility, so it’s crucial that you possess the relevant skills, knowledge, and commitment required to successfully run a company.

What is a disqualified director?

A disqualified director is someone who is banned from being a company director, usually due to ‘unfit conduct’ in a previous appointment. Disqualification periods can last up to 15 years, during which time the person may not be involved in forming, promoting, or running a company.