Does a director have to be a shareholder?

As you work your way through the limited company formation process, you are required to appoint people to various different roles in the company. 

You will need to add a director, a shareholder, and state who the person with significant control (PSC) in the company is. You also have the option to appoint a secretary.  

But does the director have to be a shareholder, or can someone else take on this role?

No, the company director does not also have to be a shareholder

Whilst it is normal for your company director to also be a shareholder, it is not a requirement. Companies House – the UK’s official registrar of companies – have no conditions in place stipulating that if a person is a director they must also be a shareholder.

The limited company roles explained

Let’s take a quick look at what each role in a limited company means (for the purposes of this post, we’re concentrating on a private company limited by shares).

Before we proceed, it’s important to note that a company can be formed with just one person taking on all of the below roles.

Director

The person, people, or corporate entity (corporate appointments are permitted if at least one person is also a director) in charge of the day-to-day running of the business. Directors have a number of official roles and responsibilities when it comes to taking care of a company.

Shareholder

The person, people, or corporate entity who owns the limited company. Shareholders have control over how the directors run the company.

Secretary

The person, people, or corporate entity who takes care of the company’s administrative duties. The appointment of a secretary has been optional since April 2008.

Person with significant control (PSC)

The person, people, or corporate entity (known as ‘relevant legal entities’) who holds significant control over the company. Shareholders will typically be PSCs but this isn’t always the case.

Thanks for reading

There you have it. Does a company director also have to be a shareholder? No, they do not.

We hope you have found this blog post helpful. 

Do you need to form a UK limited company?

Here at 1st Formations, we offer a number of company formation packages that are perfect for helping you turn that business idea into a reality. 

• Take a look at our company formation packages

Feel free to leave a comment if you have any questions about this blog post or company formations in general.