An alternate director is essentially a substitute director who steps in if the original director is going to be incapacitated for a period of time. In this post, we explore whether or not your company requires an alternate director, and answer any questions that this appointment may raise. Let’s get started.
Why you may need an alternate director
You may wish to appoint an alternate director (also referred to as simply an ‘alternate’) if a current director is going to be away for a while. This could be for a number of reasons, such as:
- Health related issue
- Family issue
- Prolonged holiday
- Other job commitments
When considering if you need an alternate director, you need to ask yourself whether the business can carry on as usual without the current director being present for work in general and for any board meetings (these being meetings between directors where company decisions are made).
If the business will not suffer, the answer is probably no, you don’t need one.
However, if the director’s absence will have a negative impact on the company, for example, their presence is required for a particular job to get done or a board meeting to be valid – you should think about appointing a suitable alternate director.
Quorum, board meetings, and alternate directors
The topic of alternate directors is particularly pertinent at the moment. This is because sole directors and their power to make legitimate decisions have been questioned in a recent High Court case.
If a company is using model articles of association (more on these shortly), for a board meeting to meet quorum requirements it needs at least two directors to be present. Anything less invalidates the meeting.
This obviously brings up major concerns for companies operating with a sole director, but also raises an issue for companies with two directors.
In a two-director company, if one director is going to be away for a period of time, the company could be facing a limbo situation whereby no decisions can be made.
In instances like this, the appointment of an alternate director could be the solution.
Not all limited companies can appoint an alternate director
The articles of association outline how a limited company is to be run.
If a company was formed prior to 1st October 2009 and adopted the Table A articles of association, then they can appoint an alternate director (unless the articles were amended to remove the alternate director provisions).
If a company was formed adopting the model articles of association – introduced on 1st October 2009 – then, as it stands, an alternate director cannot be appointed.
But it is possible to update a company’s articles of association with updated provisions regarding an alternate director (this is something that we can assist with) via a special resolution.
Once the resolution has been passed (this will require a majority of at least 75% of shareholder votes), the updated articles of association should then be sent to Companies House within 15 days of them coming into effect.
Roles, responsibilities, and powers
Unless the articles of association specify otherwise, the alternate director would normally take on the exact same roles, responsibilities, and powers as the director that they are stepping in for.
They should be treated in an identical way to other directors, including the information that they are made privy to, without which they would not be able to make informed decisions.
An alternate director is not there to impersonate another director. Their own expertise should be used and opinions given, not an opinion shaped around the personality of the director they are temporarily replacing.
How to appoint an alternate director
It would normally be the duty of the soon-to-be-absent director to recommend an alternate director. Once selected, as per a normal director appointment, the prospective director should sign a letter of consent confirming they wish to act as a director and this should be approved by a board resolution.
After the appointment has been made, Companies House should be notified within 14 days using Companies House form AP01.
1st Formations’ Director Appointment Service
1st Formations provides an inexpensive Director Appointment and Resignation Service for only £29.99 plus VAT.
With our service, we’ll take care of everything to ensure your director appointment (or resignation) is completed correctly, including the appointment (or resignation) letter, and the board resolution. We will also file form AP01 Appointment of a Director, informing you by email that the update at Companies House has taken place – usually within 2-3 working days.
Please note, that you should inform us you are using our director appointment service for an alternate director, so that we can make the alternate-nature clear in the board resolution.
Director appointment directly with Companies House
You can also appoint a director online at Companies House or using their paper form.
If you are appointing a ‘natural person’, this can be done online using Companies House WebFiling or the AP01 Appointment of director paper form.
If you are appointing a corporate director, you can again use Companies House WebFiling or the AP02 Appointment of corporate director paper form.
Regardless of your method for making the appointment, if appointing an individual you will need the following information:
- Company name
- Company number
- Date of appointment
- Full name and title of the alternate director
- Date of birth
- Residential address
- Correspondence address
- Occupation
- Nationality
And if making a corporate appointment you will need the following:
- Company name
- Company number
- Date of appointment
- Corporate body name
- Address
- Legal form
- Governing law
- Location where the company is registered
- Company number (for the director)
Who to appoint
Just like appointing a regular director, certain rules apply to who can and can’t be appointed as an alternate director.
The alternate director must:
- Be at least 16 years old (if you are appointing a person)
- Not be an auditor of the company
- Not be an undischarged bankrupt
- Not be disqualified from being a company director
Whoever you do choose to appoint must be able to follow the duties of being a company director.
What happens when the original director returns?
The alternate director should resign as soon as the director is ready to return to work. If the situation arises again, the alternate director should simply be reappointed (if they are willing to return).
Why not just appoint another ‘regular’ director?
The purpose of this appointment is to provide stability by maintaining the balance of a company.
Whilst some change is inevitable if one director is temporarily away and another is taking their place – the appointment of a brand new, permanent director wholly changes the landscape of a company.
We can help amend your company’s articles of association
As mentioned, if your company has adopted the model articles of association, you will not be in a position to appoint an alternate director unless you amend your articles.
Updating the articles is a complex process. However, our team of company secretarial experts can take care of this for you, ensuring everything is done efficiently and compliantly.
Get in touch for more information via:
- [email protected], or
- 020 3984 5387
Our team will be happy to help.
Thank you for reading
You should now have a good understanding of alternate directors, and how they can help a company get through a potentially disruptive time. Please leave a comment if you have any questions about this topic or limited companies in general.
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