What is Your Role as a Company Director? A Board of Directors Governs a Company on Behalf of Its Shareholders
. Under the Companies Act, a company must be governed by a Board of Directors. The Board, and each of its directors, is ultimately accountable to shareholders for the company's survival and success. As a director, you should participate in, review and approve corporate strategy and its formulation. You should have an accurate understanding of a company's business model, how it makes its money, and the competitive environment in which it operates. A Board of Directors ensures that executive management do a good job. The Board holds management strictly and continuously to account for the successful implementation of the company's strategy, through sound operational planning and execution.
A Board of Directors appoints a Chief Executive, and sets the Chief Executive's salary and employment conditions. The Board monitors the chief executive's performance and is ready, willing, and able to act when unsatisfactory performance occurs. Directors are part-time and their tools of trade are thought, discussion, questioning and consideration of company information. These tools are only deployed at scheduled Board meetings. Therefore, it is essential for a Board of Directors to have an effective culture of trust, diligence, commitment to the company, candour, and informed and professional debate. In this way, you, as a company director, can focus on the important issues, at the right time and in the right manner. This is essential as directors operate under strict legal duties.
Directors must act in good faith and in what they believe to be the best interests of the company. In general, that means working to achieve the best long-term results for the shareholders. Directors must also act with reasonable care, diligence and skill. In practice, that means you are required to know about what's going on in the company, how it's performing, and what key issues and risks it is facing. Directors are generally appointed at shareholders' meetings. Directors can be appointed between shareholders' meetings by the Board itself, but their appointment must be ratified by shareholders at the next meeting. Directors serve for fixed terms. Shareholders can also vote directors out. If you have any additional questions, please contact to Coddan CPM' specialists.
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Further information
Appointing Directors. Every private limited company must have at least one company director. The first directors though there may be only one of them are appointed by the shareholders who form the company. They are often selected from among the shareholders. They can be employees of the company, but do not have to be. They are sometimes required, under the company's Articles of Association, to retire by rotation, or after a set period of time. Subsequent appointments must follow procedures set out in the Articles of Association. For example, retiring directors may offer themselves for re-election at the AGM, the shareholders' annual general meeting. If you are appointed a director but have no executive position within the company, you will be classed as a non-executive. As a non-executive director, you may have nothing to do with the day-to-day running of the company.
Each limited company formed in the United Kingdom must have a company secretary, and a minimum of one director and shareholder.
The company secretary and the company director can't be the same person. As a director of a private limited company, you normally have a maximum of 10 months from the accounting reference date in which to deliver your company's accounts to the Registrar. The accounting reference date is the date to which your accounts must be prepared. Company directors are appointed by the shareholders on whose behalf they manage the company. The Companies Act requires disclosure of the first directors and the company secretary of any company, on registration. This statement must accompany the memorandum of association, and contain the directors consent to accept office. The company must notify the registrar of companies within 14 days of any change in its directors, or in the details set out in the register of directors. Any notification of a change in the composition of the board must be accompanied by a signed consent for the new director to act as such.
There is no minimum age limit in the Companies Act for a director to be appointed in England and Wales. However, he or she must be able to consent to their own appointment. You should seek legal advice if you intend to have a very young person as a director of your company. You do not have to be resident in the UK to become a director although some people not of British nationality are restricted as to what work they may do if they wish to physically come to this country.
Company law requires company directors and secretaries to disclose their residential address on form 10 first directors and secretary of a new company and 288a all subsequent directors and secretaries. The address becomes a matter of public record, available at Companies House and in the company's own register of directors and secretaries. The public availability of home addresses has deterred some organisations from registering as companies. From 2 April 2002, company directors and secretaries can apply to Companies House for a confidentiality order, under which their residential address will be kept confidential.
Nominee Director Service for Public Records for one year: It is a perfectly legal device which preserves the privacy of an individual. It is designed to help a person who would rather not disclose their interest or association with a given corporate body. The Nominee Director cannot and will not enter into any business contract or financial or moral commitment. Coddan will act as Nominee Company Director for limited companies on an annual basis. This service is primarily designed to help people keep non-trading or dormant companies fully compliant with the law and perhaps to protect the identities of the persons actually controlling the company. At the same time the appointed nominees are not actually entitled to manage the company. We provide the beneficial owner with a Power of Attorney empowering him to run the business, manage the company's activities and open and operate the company's bank accounts. Nominee Director will only sign company accounts and annual returns prepared by the accountants of the company.
Economy Plan
£ 310.00
Renewal fees from £310.00
Nominee Director For Trading Business Company: A nominee director serves as a proxy for the owner(s) of a company and acts on their behalf. The names of the company's beneficial owners are not disclosed to any third party. Nominee directors do not usually have an active role or function in the actual business of the company. A nominee director is someone who in fact is renting his or her name to you. In other words, the name of this person is used and not yours for the incorporation documents. Coddan will act as Nominee Company Director for limited companies on an annual basis. We provide the beneficial owner with a General Power of Attorney empowering him to run the business, manage the company's activities and open and operate the company's bank accounts. We will also include pre-signed, undated letters of resignation from nominee director, plus Notarised and Apostilled copy of Nominee Director' passport. Nominee Director will NOT be a signatory to the company bank account nor will run the company bank account on behalf of the company.
Premier Plan
£ 1500.00
Renewal fees from £1500.00
Nominee Director For Trading Companies: Nominee Company Director would become part of the company day-to-day business. In particular, Nominee Director would raise invoices, sign contracts and other business documentation. Obviously, the Nominee Director would remain fully responsible to act only in accordance with the wishes of the owners of the company, insofar as they are legitimate. Coddan will act as Nominee Company Director for limited companies on an annual basis. At this stage, the Nominee Director would also control over the bank account of the company (under a separate agreement we may provide this service to act as secondary signatory only, not the primary signatory). It is the only truly effective solution to shield the beneficial owner of the company from any undesired link to the company. Obviously, it is also the most costly one, because it would involve management fees based on time spent.
Legal Requirements
Nominee Directorship How it Works: Sometimes, for tax or other reasons a person does not wish to be seen as associated with a company, or be seen as a beneficiary of a company, Nominee Director Service is the answer. A nominee director is someone who in fact is renting his or her name to you. Nominee Director signs the Memorandum and Articles of Association to form your entity. The nominee will sign a General Power of Attorney document, which gives you full power to manage your company. The nominee will give you his signed and undated letter of resignation document, which gives you the peace of mind that he can't act against you. The above information is general and is intended as a summary only. Clients should seek further clarification if required before deciding if they wish to engage nominee directors. We expressly reserve the right to provide this service to anyone for any reason.
Coddan offers company formation, ready made company registration for UK limited companies. We offer electronic filing & formation services. This page is designed to give Company Directors an overview as to their responsibilities associated with being a director of a limited company experiencing financial difficulties. As a director, the law says it is up to you must keep control of the company and to seek assistance if necessary. Directors of limited liability companies are personally liable for the debts of a company if trading continues after there is no longer any reasonable prospect of avoiding insolvency. To assist directors in dealing with a potential crisis the following guidelines should be followed:
Avoid incurring further credit unless you believe that the company can pay for the goods or services ordered; If assets are disposed of ensure that market value is achieved; Do not seek to pay one creditor in priority to another; Continuing to trade whilst the company was insolvent; Always Keep proper accounting records; Always Pay Crown taxes on time; Always submit returns and accounts to Companies House on time; Always submit tax returns on time.
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Every private limited company needs to have at least one director (and a secretary). There is no maximum limit to the amount of directors you can have. Companies must keep a register of directors and secretaries, which must be available for public inspection. Directors are not generally required to own share's in the companies that they manage, but there is nothing to prevent them from doing so, and they often do. The directors are responsible for ensuring that the company does everything that it is obliged to do by law. All directors are personally responsible for ensuring that the accounts are prepared, circulated to the members (those who own the company), and delivered to Companies House on time.
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The following will explain potential liabilities that may arise due to either wrongful trading fraudulent trading, preferences, transactions at an undervalue or misfeasance. As a director you may have considered your actions were justified at the time and you may be able to defend that position. Directors should never ignore the problems hoping they may go away.
Appointing Directors. Every private limited company must have at least one company director. The first directors (though there may be only one of them) are appointed by the shareholders who form the company. They are often selected from among the shareholders. They can be employees of the company, but do not have to be. They are sometimes required, under the company's Articles of Association, to retire by rotation, or after a set period of time. Subsequent appointments must follow procedures set out in the Articles of Association. For example, retiring directors may offer themselves for re-election at the AGM, the shareholders' annual general meeting. If you are appointed a director but have no executive position within the company, you will be classed as a non-executive. As a non-executive director, you may have nothing to do with the day-to-day running of the company.
Even so, you will still carry all the same legal responsibilities as the other directors. Even if you have never been appointed a director, you could be classed as a shadow director if the other directors are 'accustomed to act' under your instructions. It could also happen if you resign your directorship but continue making decisions and giving instructions to employees. As a shadow director you would carry the same legal responsibilities, and be subject to the same penalties, as other directors. Some people are debarred from becoming directors. Auditors may not be appointed directors of the companies for which they act in their professional capacity. People who have been disqualified may not be appointed. Undischarged bankrupts may not be appointed unless they have first obtained leave from the court which imposed the bankruptcy. The appointment, departure or change of particulars of a director or directors must be reported to Companies House within 14 days, using form 288a/b/c (Forms 288 (a), 288 (b) and 288 (c)). If you have any questions please E-Mail or call us: 0800 081 1510 or +44 (0) 207 637 3881, fax: +44 20 7681 3318.
Exercising Directors' Powers. Check what limits there are on directors' activities in your company. You must pursue the objectives listed in the Memorandum of Association. Most companies list a wide range of objectives ('objects'). This is to give directors the flexibility to carry out any type of business. Some companies list only specific objectives. If, for example, the objects clause only lists running a taxi service, the directors cannot switch to running a car repair business. If the directors act outside the company's powers, the company may have an action against them. You can only change the company's main objectives by getting shareholder agreement to a new Memorandum. You must act within the powers granted in the Memorandum and Articles of Association. The Memorandum normally sets out a list of powers which the directors may exercise in pursuing the main objective(s) of the company.
For example, powers to acquire similar businesses, to take shares in other companies, to borrow money or to sell the undertaking or part of its property. The Articles of Association define the rules governing the directors. For example, how new directors are to be appointed and how many directors are required to provide a quorum. In exercising directors' powers, you are required to exhibit 'such a degree of skill as may reasonably be expected' from a person with your knowledge and experience. For example, a chartered accountant who had been a finance director for several years would be expected to know if the company was trading while insolvent. You must also exercise a degree of care in your actions as a director. The test of an acceptable level of care is what a reasonable person would do in looking after their own affairs. You are generally not liable for the actions of your fellow directors, if you knew nothing about them and took no part in them, though it is dangerous to turn a blind eye.
Live Help: Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours, our business center will be closed. When you click on the button, you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
Dear visitors, while having a chat session with a customer, we are frequently requested to give a piece of advice on tax planning or business structuring. We would like to inform you that it is against our principles to provide online advice pertaining to these issues. The points that may be covered during a session include service description, package or service price, navigation at our website, ways of making an order, methods of payment etc. Yet, if you wish us to provide you with advice on tax or business structuring, you should be aware that this service is chargeable. If you have any questions then please E-Mail or call us: 0800 081 1510 or +44 (0) 207 637 3881, fax: +44 20 7681 3318.
COMPANY DIRECTORS. INTRODUCTION
Each limited company formed in the United Kingdom must have a company secretary, and a minimum of one director and shareholder. The company secretary and the company director can't be the same person. As a director of a private limited company, you normally have a maximum of 10 months from the accounting reference date in which to deliver your company's accounts to the Registrar. The accounting reference date is the date to which your accounts must be prepared.
The company secretary is one of the two officers that every company must have to fulfil the basic requirements of UK Company Law. Even if the director conducts day-to-day business entirely alone it is a requirement that another person takes on the role of secretary. Coddan performs this role for clients who do not have a suitable person willing to accept the role or for non-UK residents who require a signatory within the United Kingdom.
UK LTD Companies from only £32.00! All Inclusive Company Registration. Each limited company package includes all statutory paperwork and is fully compliant with company law. All our private UK companies are general trading companies and can be used to conduct any type of business. A Certificate of Incorporation, and the Memorandum and Articles of Association of your company will be sent to you upon formation of your company. You can appoint your own directors and secretary BEFORE company incorporation. This is absolutely FREE. Our 4-8 hour online incorporation service enables you to register your company quickly and effortlessly. All government and filing fees are included in the cost of our E-Quick pack. All certificates and documents will be sent directly to you via email immediately following the formation of your company. It will take just 5 minutes to complete the online registration form, then your company could be up and running within 4-8 working hours.
THE E-QUICK PACKAGE CAN BE UPGRADED WITH ANY OF THE FOLLOWING FEATURES:
1. Company Pliers Seal - £20.00. 2. Laminated Hard-copy of the Certificate of Incorporation - £5.95. 3. Laminated Hard-copy of the Certificate of Incorporation, Bound Copies of the Memorandum & Articles, and Combined Company Register - £12.95. 4. Domain Name Registration for two years - £16.00. 3. Provision of a Registered Office Address for 12 months - £50.00. 4. Provision of a Nominee Company Secretary for 12 months - £49.95. 7. Certificate of Good Standing - £35.00. 8. Notarisation & Apostille of Documents.
The Companies Act 1985 requires every private company to appoint at least one director and every public company to appoint at least two. Directors usually manage the business of the company on a day-to-day basis. However, the Act does not require this, nor does it confer on them any power to do so, either individually or as a body. Under the common law, a company's powers must be exercised by its members in general meeting unless its memorandum or articles of association provide otherwise.
Several factors must be taken into account when determining the extent of the directors' powers. For example, the directors cannot exercise a power that the company itself does not have. A company's powers are set out in the objects clause in its memorandum of association.
Most articles include what is known as a general management clause. This clause usually gives the directors all the powers necessary to manage the company on a day-to-day basis. The powers are limited by the objects clause and other provisions in the memorandum or articles. In addition, the Act gives the members certain rights and powers that cannot be excluded by the articles.
The articles are deemed to be a contract between the members and the company which governs the way the company is run. It follows that the only way the shareholders can interfere in matters delegated to the directors is to change that contract (i.e. to amend the articles by special resolution so as to restrict the directors' discretion) or to issue directions in accordance with procedures contained in the articles. Even then, such resolutions or directions will have no effect on the validity of any transaction previously entered into by the directors on behalf of the company.
Company directors are appointed by the shareholders on whose behalf they manage the company. The Companies Act requires disclosure of the first directors and the company secretary of any company, on registration. This statement must accompany the memorandum of association, and contain the directors' "consent to accept office". The company must notify the registrar of companies within 14 days of any change in its directors, or in the details set out in the register of directors. Any notification of a change in the composition of the board must be accompanied by a signed consent for the new director to act as such.
It is not normally practicable for the members to manage the business on a day-to-day basis. Every matter requiring a decision would have to be put to a general meeting called in accordance with the formal requirements of the Act. This would be impossible for a company with hundreds of shareholders. Even where there are relatively few members, it is easier for them to manage the company as directors rather than as members. This is mainly because the formalities associated with board meetings are less onerous, but also because that is the way most companies are run and doing it in any other way would complicate matters unnecessarily and probably involve significant legal expenses.
In practice, the articles of most companies delegate wide powers of management to the directors. Generally speaking, these powers must be exercised by the board of directors collectively (i.e. at a board meeting). However, the articles may allow the directors to act by written resolution. They may also allow the directors to delegate their powers to some other individual or body.
In the UK, all directors are members of the same board and usually have one vote each. Under this unitary system, each director has an equal say in matters put to the board (although the chairman may sometimes have a casting vote). Articles usually allow the board to appoint one or more of the directors to some sort of executive office within the company (e.g. managing director) and to delegate any of its powers to them. These executive directors are usually salaried and manage the business of the company on a full- or part-time basis. Directors who are not executives are known as non-executive directors.
The function of the board will be to take decisions that are outside the authority of the executive directors and to set the company's strategic objectives. Non-executive directors often play a key role in monitoring the performance of the executives and setting their pay.
On the continent, two-tier board systems are more common. The company is managed on a day-to-day basis by an executive board which is appointed by and accountable to a supervisory board. The supervisory board fulfils the monitoring role performed by non-executive directors in the UK and may include shareholder and employee representatives. The system is appealing to purists as it places the non-executives above the executives in the structural hierarchy. However, it is debatable whether these structural differences make it any easier for the part-time directors to supervise the executives.
The main advantage of the unitary system is said to be that it enables the non-executive directors to contribute more effectively to the formulation of the company's strategy and to monitor the performance of the executives; its major disadvantage is that it is more difficult for the non-executive directors to be impartial and independent. These criticisms were addressed in respect of listed companies in 1992 by the Committee on the Financial Aspects of Corporate Governance, chaired by Sir Adrian Cadbury. The committee produced a code of best practice for listed companies (the Cadbury Code) which made recommendations on the constitution of boards of directors and the role of non-executive directors.
These recommendations were subsequently consolidated, together with the recommendations of the Greenbury Committee on directors' remuneration, into the Combined Code on Corporate Governance. The Combined Code recommends that the board should include non-executive directors of sufficient calibre and number for their views to carry significant weight in the board's decisions, and that non-executive directors should comprise not less than one-third of the board (Combined Code, para. A.3.1). It also recommends that a majority of the non-executive directors should be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement.
Non-executive directors considered by the board to be independent in this sense should be identified in the annual report (Combined Code, para. A.2.2). The main purpose of this recommendation is to allow investors to make their own assessments as to the independence of the non-executive directors and therefore to make their own judgements as to whether the company is complying with these and other recommendations in the Code (e.g. regarding the constitution of the audit, remuneration and nomination committees).
All directors, whether executive or non-executive, have the same responsibilities and liabilities. These responsibilities and liabilities extend to those who act as if they were directors, although not formally appointed, and to "shadow directors", that is those in accordance with whose directions or instructions the company's board of directors is accustomed to act. The responsibilities and liabilities of directors to the Company and its shareholders are governed by the Companies Acts 1985-1989, Insolvency Act 1986 and Company Directors Disqualification Act 1986. The directors may have personal liability under other legislation, for example the Theft Act, legislation relating to workplace health and safety, financial services and environmental legislation.
The basic duties of a director of any UK company are laid down in Company Law. To quote from Butterworths Company Law Guide: "Directors must act bona fide in the interests of the company and must not exercise their powers for any collateral purpose. A director must not place himself in a position where his duty to the company and his personal interests conflict and he must not profit from his position as a director. In addition, a director must exercise reasonable care and such skill as might reasonably be expected of a person of his knowledge and experience." There are two things worth noting here. One is that the directors duty is to the company and not to shareholders, so shareholders cannot usually sue in English law for perverse acts by directors except in the case of outright fraud.
Secondly there is no requirement for particular expertise when directors are appointed - so if an idiot with no financial knowledge whatsoever is appointed to the position of financial director, and he performs to the best of his abilities, then that is OK. Indeed, as the roles of individual directors are not defined, there is no necessity to even have a "finance director".
Company law actually says nothing about director selection, very little about their appointment terms and almost nothing on the operation of company boards. As a result, much of this depends on historic practice in the United Kingdom.
DIRECTORIAL AUTHORITY
The Articles may confer power upon the board to appoint a managing director and executive director. The managing director usually accepts a greater measure of responsibility for the company's overall affairs as a consequence of delegation by the rest of the board. An executive director accepts responsibility for one particular area of the company's activities, such as a sales, marketing or financial director.
The shareholders do not retain much control of the day-to-day administration of the company's affairs. They often do not have much influence on the formulation and implementation of policy either. This abdication of power into the hands of the board of directors is often recognised in the articles of assoc
Directors and Secretaries Guide
The Company Directors. Fact Sheet
£ 125.00
Nominee Director Service for Public Records for one year:
It is a perfectly legal device which preserves the privacy of an individual. It is designed to help a person who would rather not disclose their interest or association with a given corporate body.
Avoid incurring further credit unless you believe that the company can pay for the goods or services ordered;
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