Guidelines for Appointment and Dismissal of a Director for a Company in The UK

bossIt is mandatory for every company in the U.K. to have at least one director. If you are planning to incorporate a Private Limited Company (PLC), you will be required to appoint at least 2 directors. In fact, even a dormant company is required to have a natural director. A failure to appoint a director for your company may even lead to a hefty fine.

Typically, the shareholders of a company are in charge of appointing the company’s director. Members of a company may also have a say in this decision.

You will be asked to appoint a director at the time of company registration at the Companies House. And as soon as you appoint a director, the details will be recorded by them.

The process of appointing a director for your company is quite simple. But it requires careful considerations. In this article, we are going to discuss a few things that you need to keep in mind while appointing a director for your company.

Eligibility of a Director

A natural director of a company should meet the following minimum eligibility requirements:

  • Lower age limit is 16 years. However, a minimum age of 18 is recommended.

  • A person undergoing bankruptcy proceedings charged against him/her, cannot be a director of a company.

  • A person who has been disqualified from being a company’s director by the court owing to charges of fraud, breaching company laws, or any similar offence is automatically disqualified from being a director of a company.

While appointing a director for your company, ensure that the above specifications are satisfied.

A company can also be a director of your company, provided that the other company has a natural human director. This other company will then be known as a corporate director.

Authorizing the Appointment of a Director

The entire procedure of appointing a director for your company is devoid of complications and can be completed in a few simple steps. Also, it should be summarized in your company’s articles of association.

The entire process needs to be authorized. For this, your company’s members need to come to a common decision about who to appoint as the company’s director. This decision should be in writing. If your company already has a director/s and a decision of appointing an additional director is on the table, then a resolution, in writing, needs to be passed. Also, this resolution should receive the majority of votes from the directors of your company. This completes the authorization process of appointing a director.

The next step is to inform the Companies House about the decision and this must be done within 14 days of authorization.

Information Required

Before informing the Companies House about your decision, it is important to collect the following information regarding the potential director of your company:

  • Complete name of the new director (including the middle name is a wise decision since this information may be required at a later stage by banks or other similar third party associations)

  • Date of birth

  • Nationality

  • Country in which he/she resides

  • Residence address

  • Service address

  • Profession

  • Date of appointment

Apart from these, your company’s name and company registration number will also be required.

If the potential director of your company is a corporate one, then the following details will be required:

  • Name of the company

  • Company registration number

  • Registered name of corporate director

  • Address of corporate director

  • Registration place of corporate director

After submission of this information at the Companies House, these will be documented and added to the database. This information will be displayed in the public record. However, some directors may wish to remain anonymous. In that case, a nominee can be appointed and his/her information can be placed in the public records instead of the director’s. The role and responsibilities of the director will remain the same and the nominee will not have share any responsibility with the director.

Dismissal of a Director

A director can be removed from a company in case he/she breaches a law. A termination is always carried out according to the terms specified in the following:

  • Company’s articles of association

  • Agreement between the company and the director

  • Companies Act 2006

If the reason for terminations is not in accordance with the specifications mentioned in any of the above, shareholders would need to pass a resolution that draws a majority vote.

That being said, you need to keep in mind that there should always be at least one natural director for your company.

In case of termination of a director, you would need to notify the Companies House since this information needs to be updated in the public records.

You need to keep these points in mind while appointing or dismissing a director for your company. As your business and its responsibilities grow, you can keep appointing additional directors as and when you deem fit.

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