Company Director Information
A Limited Liability Company guide to company directors.
Click on the following questions to be directed to the answers.
Does
every company need a director?
Appointing the Directors
How do I change the
particulars of a director?
Can anyone be a director?
Must a director also
be a shareholder?
What are the directors' general
responsibilities?
What responsibilities does
a director have towards Companies House?
What happens if accounts
or annual returns are not filed?
Are directors really prosecuted?
What happens if accounts
are delivered late?
How can prosecution and penalties
be avoided?
Do
directors details have to be on company stationery?
The Register of Directors
and Secretaries
Other Directorships
Does
every company need a director?
Yes.
According to the Companies Act every company must have at
least one Director. A sole director cannot also be the secretary.
Therefore, a company must have at least two officers, a
director and a company secretary. However, it is possible
for the company secretary to also be a director of the company
if another director or secretary is also appointed.
Appointing
the Directors
The
members (shareholders) of the company decide who are to
be the directors. This will normally be done in a general
meeting though a company can make decisions by written resolution
signed by all members entitled to vote. The directors are
responsible for appointing the secretary. When a new officer
is appointed a form
288a must be filed with Companies House within 14 days.
How do I change the
particulars of a Director?
If a company director or secretary moves house or changes
their name the details should be amended in the Register
of Directors/Secretaries and Companies House should be notified
on form 288c. Companies House must be notified within 14
days of the change.
Can
anyone be a director?
Generally
it is up to the members (shareholders) to appoint the people
they believe will run the company well on their behalf.
Except for occasional restrictions imposed by the government
on the activities of certain foreign nationals, a director
can be of any nationality and can live any where in the
world. The only restrictions that prevent anyone becoming
a director are:
- the
person must not have been disqualified by a court from
acting as a company director (unless he or she has been
given leave (permission) to act by a court for a particular
company);
- the
person must not be an un-discharged bankrupt (except with
leave of the court);
- in
Scotland
,
anybody under the age of 16. In England
& Wales
there are no age restrictions
- for
a PLC or their subsidiaries, anybody over the age of 70
unless specifically approved by a general meeting of the
company.
Must a director also
be a shareholder?
No, there is no requirement for directors to also be shareholders
unless the company's own Articles of Association actually
state this (very rare). However, as the shareholders are
responsible for appointing the directors it is common for
the shareholders to also be the directors of small companies.
What
are the directors' general responsibilities?
The
directors are responsible for the management of the company,
While their powers can be restricted by the company's articles
they can, in most cases do anything that the company can
do. With these powers, come responsibilities. Since the
directors can act as and for the company, they must ensure
that the company does everything that it is obliged to do
by law and that the decisions they make are in the best
interests of the company.
In
this context the interests of the company are those of the
shareholders as a whole. These may be different from the
interests of customers, employees, individual shareholders
or the directors themselves.
Except
where powers are delegated to a committee of directors or
to a managing or executive director, the directors act collectively
as a board. Individual directors do not have the authority
to commit the company unless authorised by the board.
What
responsibilities does a director have towards Companies
House?
Every
company director has a personal responsibility to ensure
that statutory documents are delivered to the Registrar
as and when required by the Act. The following are of particular
importance:
- Submitting
annual accounts (only for limited companies). Failure
to submit accounts on time can lead to increasing penalties,
the dissolution of the company and prosecution. See the
notes below.
- Submitting
the annual return. Whilst this may be completed by the
company secretary it is the directors responsibility to
ensure that it is submitted on time
- notice
of change of directors or secretaries or in their particulars
- notice
of change of registered office
What
happens if accounts or annual returns are not filed?
All
the directors of the company could be prosecuted. Failure
to deliver documents on time is a criminal offence . On
conviction, a director could end up with a criminal record
and a fine of up to £5,000 for each offence.
Alternatively,
if the Registrar believes that the company is no longer
carrying on business or in operation, he could strike it
off the register and dissolve it. If this happens all the
assets of the company, including its bank account and property,
generally become the property of the Crown.
The
company can only be restored to the register and continue
in existence by means of a court order.
Are
directors really prosecuted?
Yes.
On average more than 1,000 directors are prosecuted each
year for failing to deliver accounts and returns to the
Registrar on time. Persistent failure to deliver statutory
documents on time may also lead to a director being disqualified
from taking part in the management of a company, for a specified
period.
What
happens if accounts are delivered late?
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.
As a director of a public limited company , you
normally have a maximum of 7 months from the accounting
reference date in which to deliver your company's accounts
to the Registrar.
If your company's first accounts cover a period of more
than 12 months, they must reach Companies House within 22
months of the date of incorporation for private companies
and 19 months for public companies.
If accounts are received late, the company will automatically
be charged a 'late filing penalty'. These penalties can
be in addition to any fine imposed by a court. The late
filing penalty will be calculated according to the following
scale:
| Length
of delay |
Private
company |
Public
company |
3
months or less |
£
100 |
£
500 |
3
months one day to 6 months |
£
250 |
£1000
|
6
months one day to 12 months |
£
500 |
£2000
|
More
than 12 months |
£1000
|
£5000
|
How
can prosecution and penalties be avoided?
Make
sure your company complies on time with all its filing obligations,
not only in connection with its accounts and annual returns,
but in connection with all other documents required under
the Act.
Do
directors details have to be on company stationery?
A company's business stationery need not show the names
of the directors but, if it does, it must include all of
them. There is no requirement to show the name of a company
secretary who is not also a director. For further information
about what to include on your company stationary follow
this link to our FAQ's
page.
The
Register of Directors and Secretaries
While companies must keep their own register of directors
and secretaries, which must be available for public inspection,
Companies House also keeps a register based on information
provided by individual companies.
This is used by Companies House when it produces the annual
return form for each company. It is also used as a convenient
way of providing information to anyone who needs it. The
register includes details of the appointments held by individuals
as well as the directors and secretaries of particular companies.
Other Directorships
Anybody is entitled to know who the directors of a company
are. They are also entitled to know whether a director holds,
or has recently held, directorships of other companies.
This information should be shown in the company's register
of directors and secretaries, on the form 288a notifying
the appointment of a director and on the annual return.
(Other directorships are not currently pre-printed on the
annual return form).
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