Requirements for appointing directors and a company secretary

The officers of a company are its directors and company secretary.

A private company limited by shares must have at least one director, who must be a natural person. It is possible to have more directors and the Articles may set a maximum number (although this can be altered). A company secretary is optional for this type of company.

A company cannot have a subsidiary company as one of its directors.

The first directors are named in the application to incorporate a company. Additional or replacement directors are appointed by these directors at the first board meeting (and thereafter by current directors for subsequent board meetings).

A meeting of shareholders is necessary to remove a director before his term of office expires.

Appointments and resignations of directors must be filed at Companies House using the prescribed forms and completed in the manner required by the Registrar of Companies.

For expert advice when setting up your business contact FWJ. Contact Sally Bradshaw on 02078410390

Company Formation - Setting Up a Business

If you are new to running your own business you will have a great many things to consider at the outset.

Amongst the issue of obtaining funding, the trading name, the design of logos, the finding and setting up of premises and, most importantly, finding customers and securing sales, there are the perhaps less glamorous legal and accounting issues to consider.  Most importantly is the ‘vehicle’ you choose by which to run your business.

There are three ways you can run your business as follows:

    As a sole trader - everything is in your name, even if you use a trading name.  It requires little or no formalities.  You account for your net income (after expenses) to Her Majesty’s Revenue & Customs (“HMRC”) annually.  Self-employment has the added benefit (as opposed to PAYE employment) that you can deduct expenses from your income before calculating your tax liability (subject to accountancy advice).  However, as a sole trader, you are also personally responsible for any liability the business incurs, both in terms of the creditors who are owed money and any legal action taken against the business.

    A formal or informal partnership with one or more people - you share the benefits and risks with your partners, the precise terms of which can be recorded in a partnership agreement. As a partner of an informal partnership, you (together with your partners) are jointly and severely liable for all partnership debts and other liabilities (in a similar way to being a sole trader).  As a partner of a formal partnership you may wish to take limited liability (generally referred to as a limited liability partnership (“LLP”)) in which case the partnership must be registered at Companies House and can limit your personal liability in an identical way to a company (see below).    

    A limited liability company – conventionally a company is incorporated by shareholders.  Each shareholder has his/her liability limited to the amount required to pay for their shares (often referred to as “share capital”).  Directors run the company and shareholders only have input into the appointment of directors and in reviewing financial accounts.  Quite often, particularly in small companies, the shareholders and directors are the same individuals (often referred to as an “owner-managed company” or a “quasi-partnership”) with the expectation that they will be allowed to be involved in the running of the company (although this is not always the case).

Read the FWJ booklet - The 8 most common mistakes when setting up a business