Appointing Your Company Directors

Mar 02, 2012

The Companies Act 2006 requires every private limited company formed in the UK to have at least one director on incorporation, although, of course, more can be appointed either at that time or later. At least one director of the company must be an actual person, the other directors can either be personal or corporate directors.

There are some stipulations as to who can be a director:

  • They must be at least 16 years of age
  • They must not be an undischarged bankrupt (unless they have obtained court permission to act for that particular company
  • They must not have been disqualified from acting as a director

The directors of a company have a legal responsibility to prepare and file their company documents at Companies House. The principal documents that have to be filed on an annual basis are the Annual Return and the Annual Accounts. Other documents that may require filing from time to time would include any changes to the officers of the company or their details, such as a change of address, a change in the situation of the registered office, allotments of shares and registration of any mortgages or charges against the company.

The powers of a company director are limited by the Articles of Association of the company and may have an objects clause that restricts the type of business the company can do, may prohibit borrowing money or may set limits on the minimum of maximum number of directors allowed. Since the passing the Companies Act 2006 most private companies have a version of the Companies House Model Articles which allow companies a large degree of latitude but it is always good practice to check the company Articles if in doubt. If necessary, it is possible to amend the Articles by resolution.

A company director is responsible for the for the day to day running of the business and is expected to exercise his duties with care and skill and act in good faith in the interests of the company. Specifically this includes avoiding any conflicts of interest and declaring any conflicts of interest he may have, not making any personal profits at the expense of the company, not accepting any benefits from third parties and treating all shareholders equally.

In the ordinary running of the business the company director is likely to have responsibilities for health and safety, employment and tax issues as well as specialising in their own particular area of expertise such as sales, finance, marketing or personnel. At all times and in all situations they are expected to use their experience and knowledge for the interests of the company and to act in a way most likely to promote the success of the business.