Appointing another business entity as a director in your private limited company is similar to appointing an individual. However, there are a few differences.
In this post, we take you through the required steps to appointing a corporate director, as well as look at some other factors that you need to be aware of.
At least one natural person must be a director
It is a requirement of the Companies Act 2006 that a private limited company must have at least one natural person appointed as a director at all times. If you are appointing a corporate director, they can not be a sole director.
Any paper company formation application (made using the IN01: Application to register a company form) that does not name at least one natural director will be rejected by Companies House. If the application is being processed online, as most now are, you will simply not be able to navigate to the end of the process unless a natural person is named as a director.
If a company has been registered with one natural person as the director, and that person resigns, the company would be ‘in default’ – whether or not a corporate director was also in place. This could result in the company receiving a fine.
The legality of corporate directors
Whilst it’s fair to assume that corporate directorships are generally legitimate, as a concept they are often associated with unlawful activity as they can help individuals cloak their involvement with a company.
However, as it stands, you can still appoint another business entity as a director.
How to appoint a corporate director
The process for appointing a corporate director depends on when, in a company’s lifetime, the appointment is being made.
If the corporate director is being appointed at the same time as a company is being formed, you must provide Companies House with the necessary director information – covered below – when completing the IN01: Application to register a company form (please note, you will not see reference to this specific name if you are forming the company online).
Alternatively, if the corporate director is being appointed after the company has been formed, the company must follow a formal internal process before notifying Companies House of the appointment. This includes:
- An authorising person from the corporate director company signing a letter of consent, stating that the business wants to become a director of the company.
- A majority of the company’s shareholders (from the company that is making the appointment) agreeing to the appointment through the passing of an ordinary resolution. If the company’s articles of association allow it, this can also be voted in by the current board of directors.
Companies House must then be notified of the appointment within 14 days via the AP02: Appointment of corporate director form (please note, this name will not be mentioned if you are making the appointment online).
Whether the appointment is being made during the company formation or afterwards, Companies House requires the following information for each corporate director being appointed (the information differs slightly depending on where the corporate director was registered):
Authoriser details (UK entities and non-UK entities) – You must provide the name of an authorising person from the company that is being appointed. This is typically a director or secretary, but can be anyone else from the company who has been authorised. Despite providing their name, this person does not take on any extra role or responsibility related to the corporate directorship.
The legal name of the corporate director (UK and non-UK) – This is the name of the company that is taking on the role.
Company registration number (UK and optional for non-UK) – This is the company’s unique reference number/code.
Registered office address/principal office address (UK and non-UK) – This is the official address for the company and must be a physical location where documents can be delivered and then seen by its officers.
Country of registration (UK and non-UK) – The answer provided here ascertains whether the legal form and governing law of the company must also be provided.
The legal form of the company (non-UK only) – This is the business structure of the company that is being appointed. For example, a type of legal form in the US is a ‘limited liability company’ (LLC).
Governing law of the company (non-UK only) – This is the corporate law that the company abides by. For example, an LCC registered in Delaware would follow the Delaware General Corporation Law.
Date of appointment (UK and non-UK, post-formation only) – If the corporate director is being appointed after the company was formed, you will also need to notify Companies House of the date on which the appointment was made within the company (not the date on which Companies House are being notified).
The responsibilities of a corporate director
Once a corporate director has been appointed, they take on exactly the same duties as a human director would, with responsibilities including:
- Following the rules of the company as defined by the articles of association
- Notifying Companies House of any changes to the company
- Ensuring the company’s internal registers and records are maintained
- Filing annual accounts and tax returns correctly and on time
- Paying the required corporation tax
- Being transparent with shareholders if they (the corporate director) will benefit from a company transaction
Notify Companies House of a corporate appointment with our Online Company Manager
If you formed your company with 1st Formations, you can use our free Online Company Manager to make various updates to your limited company that then sync up directly with Companies House. This includes the facility to notify Companies House about a corporate director appointment.
Here’s how to do this:
- Log in to the Online Company Manager
- Select ‘My Companies’
- Click on the appropriate company name
- Scroll down to ‘Appointments’ and select ‘Add New Officer’
- Confirm that the appointment you are making is an ‘official appointment’
- In the ‘Type’ field, select ‘Corporate’
- Proceed to enter the corporate director’s information
- Select ‘Save’
The information will be sent to Companies House, who normally processes the update in a matter of hours.
See our ‘Making the most of your Online Company Manager’ blog for more information.
Let us help appoint your corporate director the correct way
As highlighted in this post, if your company has already been formed, you must follow the correct procedure for appointing a corporate director. It is not a case of just notifying Companies House of the appointment.
With our Director Appointment & Resignation Service, available for £29.99, we will take care of all the necessary steps required to properly appoint a corporate director. Our company experts will:
- Produce the appointment letter and arrange to have this signed
- Draft the required company resolution
- Prepare the necessary Companies House documentation and file this accordingly
Thanks for reading
We hope this post has answered your questions on corporate directors. If you still have any queries related to corporate directors or company officers in general, please leave a comment and we will be in touch.