Different Types of Directors
(WS3)
Introduction
Different types of directors
1. Executive directors – have a job within the company and often work at the
company full time. They are usually employees as well as directors.
2. Non-executive directors – don’t work at the company all the time, they oversee
the running of the company from a more of an objective standpoint.
3. Alternate director – they are appointed by a director who can’t attend a meeting
for some reason and wants another person to attend in their place. Their
status/position is set out in the company’s articles of association. The articles
may allow alternate directors to attend meetings and vote as though they were
directors. Articles may say that alternate directors are liable for their actions in
the same way as if they were directors.
4. De Factor Director – act like directors although they have not been formally
appointed. The law treats them as directors which means they are subject to all
the rules and duties which apply to directors. De facto directors will be involved
in running the company. They may vote at board meetings, take decisions which
are reserved to the directors by the company’s constitution.
5. Shadow Director – people who are nearly directors. This is someone who tells
the company’s real directors what to do.
Shadow Directors
Definition in s251 CA 2006. A shadow director is someone who isn’t a director but
who controls what the company does.
Appointment – preliminary matters
How many directors must there be? S154 CA 2006 says that every private company
must have at least one director and every public company must have at least two
directors. A company’s articles of association may set minimum or maximum
numbers of directors, although this is less common in more modern articles.
Who can be appointed? s155 CA 2006 says that every company must have at least
one director who is a natural person. This means that at least one director must be a
human being – not a company. Also, s157 CA 2006, the minimum age for being a
director is now 16. S11 of the Company Directors Disqualification Act 1986 =
someone who is bankrupt is not allowed to be a director or a ‘de facto’ director
Appointment – the mechanics
First directors are appointed and named in the company’s incorporation
documents. Because of their responsibilities, the first directors have to sign to
give their consent to their appointment.
Further directors are appointed in accordance with the company’s articles.
Normally, the articles will allow the shareholders to appoint directors by ordinary
resolution. Sometimes, existing directors will be allowed to appoint new directors.
Register of directors - S162 CA 2006 requires every company to keep a register
of its directors. This register is kept at the company’s registered office and it can
be inspected by any of the company’s members. Under the Companies Act 2006
this register no longer needs to contain the director’s home address. Under s165
– company does have to keep a register of the director’s home addresses but this
register is confidential.
Form needs to be sent to Companies House when a director is appointed. S167
CA 2006 says that new directors have to sign this, to show that they agree to be
a director, and the company must send it to Companies House within fourteen
(WS3)
Introduction
Different types of directors
1. Executive directors – have a job within the company and often work at the
company full time. They are usually employees as well as directors.
2. Non-executive directors – don’t work at the company all the time, they oversee
the running of the company from a more of an objective standpoint.
3. Alternate director – they are appointed by a director who can’t attend a meeting
for some reason and wants another person to attend in their place. Their
status/position is set out in the company’s articles of association. The articles
may allow alternate directors to attend meetings and vote as though they were
directors. Articles may say that alternate directors are liable for their actions in
the same way as if they were directors.
4. De Factor Director – act like directors although they have not been formally
appointed. The law treats them as directors which means they are subject to all
the rules and duties which apply to directors. De facto directors will be involved
in running the company. They may vote at board meetings, take decisions which
are reserved to the directors by the company’s constitution.
5. Shadow Director – people who are nearly directors. This is someone who tells
the company’s real directors what to do.
Shadow Directors
Definition in s251 CA 2006. A shadow director is someone who isn’t a director but
who controls what the company does.
Appointment – preliminary matters
How many directors must there be? S154 CA 2006 says that every private company
must have at least one director and every public company must have at least two
directors. A company’s articles of association may set minimum or maximum
numbers of directors, although this is less common in more modern articles.
Who can be appointed? s155 CA 2006 says that every company must have at least
one director who is a natural person. This means that at least one director must be a
human being – not a company. Also, s157 CA 2006, the minimum age for being a
director is now 16. S11 of the Company Directors Disqualification Act 1986 =
someone who is bankrupt is not allowed to be a director or a ‘de facto’ director
Appointment – the mechanics
First directors are appointed and named in the company’s incorporation
documents. Because of their responsibilities, the first directors have to sign to
give their consent to their appointment.
Further directors are appointed in accordance with the company’s articles.
Normally, the articles will allow the shareholders to appoint directors by ordinary
resolution. Sometimes, existing directors will be allowed to appoint new directors.
Register of directors - S162 CA 2006 requires every company to keep a register
of its directors. This register is kept at the company’s registered office and it can
be inspected by any of the company’s members. Under the Companies Act 2006
this register no longer needs to contain the director’s home address. Under s165
– company does have to keep a register of the director’s home addresses but this
register is confidential.
Form needs to be sent to Companies House when a director is appointed. S167
CA 2006 says that new directors have to sign this, to show that they agree to be
a director, and the company must send it to Companies House within fourteen
