Directors’ Duties in Great Britain

>> Board Requirements in Great Britain

Appointment of directors

A director may be appointed by either a shareholders resolution or by resolution of the directors. The minimum number of directors which may be appointed to a limited company is one (1). There is no statutory maximum number of directors. Directors may resign from their position by submitting a resignation letter to the company, which then must be registered with Company’s House. Please note the resignation of the director should be confirmed with a board resolution.

Please note there is no requirement under the Act for a private limited company to have a company secretary. Where a private company takes advantage of this exemption, anything authorised or required to be done by the company secretary may be done by a director or a person authorised by the directors.

The following individuals are restricted from acting as a director of a limited company in the UK:

  • any individual who is currently under the age of 16 years old
  • any individual currently disqualified from being a company officer
  • any individual who is an un-discharged bankrupt

Please note, whilst a corporate entity may be appointed as a director of another company in  the UK, at least one director must be a natural born person.

There are no requirements regarding the residential status, nationality of directors, education or professional experience.

Board meetings and composition requirements

The typical size of a board of directors varies with the size of the company and possibly the industry or business sector which it operates in. A board should not be larger than it needs to be, however the board should be sufficiently large so that its members collectively have the knowledge, skills and experience to make decisions and to provide effective leadership of the company.

Should there be more than one director appointed, the directors may appoint a director to chair their meetings, who at the time will be known as the Chairman, and they may terminate their appointment at any time and have a casting vote in the case of a deadlock.

There is no legal requirement for the minimum number of meetings that a board should hold each year as this should be determined by the directors themselves. However, as an implied minimum, the directors must meet each year to approve the Company’s report and accounts that are required to be prepared and filed at the UK Companies Registry, Companies House.

Signatory rights/powers of directors

A director has a duty to act in accordance with the powers delegated by the company’s constitution and ensure that said powers are only exercised for the purposes for which they were conferred. Any business arising at a board meeting should be decided by resolution, and may be recorded by way of:

  • minutes of a meeting of the directors
  • a written resolution signed by each of the appointed directors.

This may be taken by either of the directors, or a sole director and may be recorded by way of minutes of a meeting of the directors. Whenever there may be more than one director appointed, at least two directors need to be present at a meeting to pass any resolution. A resolution in writing may be signed by the directors entitled to vote, and is effective as if it had been passed at a meeting of the board.

Decisions of directors are passed by a majority of the votes of the directors entitled to vote by a show of hands. Further, the board minutes of the meeting of directors should record any decisions to vote in favour of/against any proposed resolutions. Board meeting minutes and written resolutions should be kept at registered office or SAIL for at least 10 years.

Conflicts

A director has a duty to exercise independent judgment, and must not use his or her position to make profits at the Company’s expense. If directors are found to have secretly profited from a contract, they could be liable to hand those profits over to the Company. Directors are also legally obliged to declare any actual or potential conflict of interest in the company, or an actual or proposed transaction of the company. For example, if the director has interests in another company with which their company is planning to do business. Normally the directors will be expected not to vote or count at a meeting at which the matter is considered, if they do, their vote could be disregarded. The Articles of the Company may allow a director to vote on a contract transaction or arrangement if they have previously disclosed this interest to the Company.


Latest version updated 22nd March 2018

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