Directors, shareholders, people with significant control (PSCs), and company secretaries are different types of official appointments in UK limited companies. All companies have at least one director and one shareholder (or guarantor, if the company is limited by guarantee), most companies have PSCs, and some companies choose to appoint secretaries.
In this blog post, we’re going to provide an overview of the different appointments and take a look at the responsibilities that come with each.
Company directors are individuals who are legally responsible for everything that a company does. They must ensure that the organisation complies with all legal obligations set out in the Companies Act 2006, the articles of association, and all other regulations relevant to the business.
You need to be aware of the following when forming a company and appointing a director:
- At least one director must be appointed during the company formation process
- Directors are normally shareholders in the same company
- Companies can appoint as many directors as they like
- They can be natural persons or corporate bodies, but there must always be at least one natural director
- You do not have to live in the UK to be a director of a UK company
- They must be at least 16 years of age
- Undischarged bankrupts and disqualified directors cannot be appointed to this role
The role of a director involves:
- Managing the company’s activities
- Making decisions on behalf of the company and its members
- Overseeing finances
- Ensuring the company meets its statutory reporting obligations
- Paying business taxes
- Maintaining company and accounting records
- Strategic planning and decision making
Shareholders (members) are individuals who own a company by taking at least one of its issued shares. The first shareholders (those who become members during the company formation process) are also known as subscribers.
Here’s the information you need to know about shareholders and the companies they are to hold shares in:
- Companies must have at least one shareholder
- Every shareholder must hold at least one share in the company
- They are normally directors of the same company
- Shareholders are usually PSCs
- Companies can have as many shareholders as they want
- They can be natural persons or corporate bodies
- You do not have to live in the UK to be a shareholder of a UK company
- There is no minimum age requirement to be a shareholder
The role of a shareholder involves:
- Investing money in a company in exchange for one or more shares
- Appointing the first directors during the company formation process
- Exercising control by voting on important matters regarding the company
- Receiving a percentage of any company profits in the form of dividends
- Assuming limited liability for the company’s debts – their liability is based on the nominal sum they promise to pay for their shares
The extent of each shareholder’s ownership and/or control of a company is determined by the percentage of shares held and/or the rights attached to those shares.
People with Significant Control (PSCs)
Since 30 June 2016, companies must identify and provide Companies House with details of all people with significant control (PSCs). These are individuals who have the right (power) to exercise a significant degree of influence or control over a company.
Typically, a PSC is any person who:
- holds more than 25% of the company’s shares
- holds more than 25% of the company’s voting rights
- has the right to appoint and remove the majority of the company’s directors
In many companies, particularly those owned by just one or two people, every member is a person with significant control. For companies that are owned by many different shareholders, only those members with the highest percentage of shareholdings or certain rights will be PSCs – minority shareholders who hold less than 25% of the company’s stock or voting rights will not be PSCs.
Directors do not qualify as people with significant control when carrying out their normal duties. They are only classed as PSCs if they are also members and meet one of the qualifying conditions.
The role of the company secretary is predominantly administrative and advisory in nature, ensuring that a company and its directors operate in accordance with the rules and regulations to which they are subject.
Here’s what you need to know if you are appointing a secretary:
- Appointing a company secretary is optional for private limited companies but mandatory for PLCs
- Anyone can be appointed as the secretary of a private company, whether a natural person or corporate body, including directors, members, and PSCs
- Companies can appoint as many secretaries as they like
- You cannot be a company secretary if you are a disqualified director or undischarged bankrupt
The role and responsibilities of a company secretary are wide ranging and typically include:
- Statutory filing and reporting, including confirmation statements and annual accounts
- Maintaining company and accounting records
- Ensuring that statutory registers are up to date
- Organising meetings of the directors and shareholders
- Overseeing and advising directors on matters of corporate governance and compliance
Many of these duties are similar to those normally carried out by directors. However, secretaries are appointed at the discretion of directors to provide support, and it is the directors who are ultimately responsible for the company and its actions.