This guide was written by Coffin Mew LLP and is for general information only. Last updated October 2014.
What is a director?
Company law dictates that a private company must have at least one director; a public company must have at least two directors. From 1 October 2008 under the Companies Act 2006 a director now has to be at least 16 years old and at least one director must be a 'natural person' so that the board does not consist solely of corporate entities. The Companies Act 2006 defines a director as ‘any person occupying the position of director by whatever name called’ - directors are often referred to as a company’s ‘officers’. Anyone can be a director provided that they have not been disqualified and subject to certain restrictions. Previously under the Companies Act 1985 public companies did not allow a person over 70 years old to be a director and directors would have to retire when they reached that age. From 6 April 2007 this upper age limit was removed under the Companies Act 2006, meaning that people over the age of 70 years may be appointed to the board without shareholder approval and existing shareholders do not have to retire when they reach 70 years of age. The directors are responsible for the day-to-day management of the company. In smaller companies directors and shareholders may be the same people but the roles are very different and distinct. It is important that directors/shareholders are aware of the distinction and act appropriately at all times, since it is a company’s shareholders who retain ultimate control over the company and can exercise their power to remove and replace directors by ordinary resolution (that is a simple majority vote at a general meeting of the shareholders).
As well as being a shareholder, a director may act as agent, trustee and professional adviser to a company. A director may also be an employee of the company. The duties that directors owe to the company are thus determined by the different positions they hold in a company, whilst their powers as directors flow from a company’s Articles of Association. Directors are also governed by the Companies Act 2006 and are regulated by the Registrar of Companies at Companies House.
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- What is a director?
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