Whis is a company director?

Who is a company director?

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A company director is responsible for the day to day running of the company. Director duties have a wide range depending on the size of the company. For small and micro-companies, directors tend to be actively involved in all the daily activities and operations of the business.

For example in a one or two shareholder company directors are most likely running the business. A larger company is likely to have a board of directors whose primary functions are supervisory, setting the company’s strategy and ensuring that the company is focused on increasing shareholder value.

Below are some of the duties that company directors are typically responsible for:

  • Company policy, business strategy, goals & objectives
  • Monitoring the company’s performance
  • Senior executives/staff appointment, as well as line managers and operations managers (in smaller companies)
  • Accountability to the company’s shareholders
  • Managing Directors and Chief Executive Officers (CEO) are individuals who have overall responsibility for running the company.

Do we need to have company directors when forming a company?

Yes. Every company needs to have at least one company director. When you form a new company you will need to appoint company directors at the same time. For most small companies company directors and company shareholders tend to be the same people.

When you use the MachFast.com app to form the company, you will be asked to enter details for the new company’s directors.

What information do company directors need to provide when they become company directors?

Company directors need to provide their full name, address, date of birth, nationality, country of residence, former names and business occupation. This information is easily completed using the MachFast.com application and will be included in the company’s public information when the new company is created.

In addition the new director must provide a service address where they can receive official postal correspondence from Companies House, HMRC and credit agencies. The service address may be the director’s residence or any other address (including the company’s registered address). The most important point is that the Director must be able to receive important mail from government agencies and Companies House.

It is important to provide new company directors with the company’s Articles of Association and Memorandum of Association. The Memorandum of Association is the document that was created when the company was formed.

Can a company director be appointed at any time?

Yes. A company director may be appointed at any time during and after the company is formed. If you would like to appoint a new company director after the company is formed, you can submit form AP01 with Companies House. Normally, how new directors are appointed and how many directors a company may have is defined in the Articles of Association.

The Articles of Association outline how the company is managed and governed. When you form a company with MachFast.com your company will normally adopt standard Articles of Association. These articles are approved by Companies House. You may also choose to create your own Articles of Association. If you choose to create your own, we would strongly advise that you get professional advisors to help you draft custom articles. You can use and upload customer Articles of Association whe you use the MachFast.com app.

What powers do company directors have?

Directors have wide powers and responsibilities in the company. These may cover day-to-day company management, staff supervision, regulatory & legal compliance, responsibilities to shareholders.

Companies Act 2006 and the Articles of Association broadly define the constraints and limits on a company director’s powers. For example, the Articles of Association may often constrain the director’s ability to deal with financial institutions such as banks, to commit the company to borrow money or deal with creditors.

If a company has more than one director, directors tend to act in collaboration and agreement with other directors (or board members). Typically regular Board of Directors meetings are held to discuss and agree a particular course of action.

The articles of association may sometimes allow specific delegated power to individual directors.

What are the duties of a company director?

The Companies Act 2006 defines the duties that a company director must perform. Company directors have the ultimate responsibility for ensuring that the company meets all of its statutory and regulatory obligations. Directors must ensure that company accounts are prepared on time and that relevant reports are given to shareholders. It is absolutely critical that company directors ensure that the accounting reports are maintained.

Please note that if company directors fail to carry out their statutory duties, they may face penalties. Directors may incur personal liability, both civil and criminal if they fail in their statutory duties. Company Directors’ Disqualification Act 1986, may disqualified individuals from acting as company directors for two to fifteen years.


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