How to appoint and remove a company director in the UK?
A company director can be appointed during the formation of the company or at any point thereafter. Similarly, directors can resign or be removed at any time following incorporation. However, these actions must be approved by the company’s members or existing directors, in line with the Companies Act 2006, the articles of association, and any applicable shareholders’ agreement or director’s service contract.
Limited companies are required to have at least one natural (human) director. Therefore, if a sole natural director resigns or is removed, a new director must be appointed either beforehand or simultaneously with the removal.
Appointing a director and Informing Companies House
The process of appointing a company director and notifying Companies House is straightforward. It can be done either online or by post.
During the company formation process, the members (shareholders or guarantors) typically decide who will be appointed as directors. In many cases, members appoint themselves as company directors.
After incorporation, appointing a director follows a formal process. The appointed director must sign a letter of consent to confirm their willingness to act as a director. Additionally, a majority of the members must approve the appointment by passing an ordinary resolution.
In many companies, the appointment of a director can also be approved by the existing board of directors.
Once the appointment is made, Companies House must be notified within 14 days using form AP01 (Appointment of Director). The form should include the following details:
- Company name
- Company registration number (CRN)
- Date of appointment of the new company director
- Title, full forename(s), and surname (including any former name(s))
- Date of birth
- Residential address
- Service address
- Occupation
- Nationality
The process for appointing a corporate director is the same as appointing a natural director. However, the company receiving the corporate director’s appointment must have at least one other director who is a natural person.
When appointing a corporate director, the following details must be submitted to Companies House on form AP02:
- Company name
- Company registration number
- Date of appointment
- Registered name and number of the corporate director
- Registered office or principal address of the corporate director
- Place of registration
- Legal form and governing law (for non-EEA corporate directors)
The company’s statutory register of directors must be updated promptly following any director appointments. This register, which is kept at the registered office or SAIL address, is a public record and must be available for inspection.
What does Companies House mean by director’s ‘occupation’?
When appointing a company director, you’ll be required to provide their ‘occupation.’
Although no formal qualifications are needed to become a director, the role is primarily managerial and administrative. However, many directors also have specific professional backgrounds, such as being a qualified accountant, lawyer, marketing executive, IT specialist, HR manager, or chartered secretary, and their occupation may influence their duties within the company.
If applicable, you can list the director’s occupation based on their profession. Alternatively, you can simply state ‘Director’ or leave the section blank.
How to change a director’s details at Companies House
Except for a director’s date of birth, any details registered at Companies House can be updated using form CH01. In most cases, these amendments can be made quickly and easily through 1st Formations Online Company Manager.
Companies House will update the public register within approximately 48 hours.
If a director’s date of birth is incorrect, it can only be changed by submitting a replacement appointment form. If the wrong date was registered during incorporation, you must submit both forms RPCH01 and RP02a to correct it.
Are the details of company directors accessible to the public?
Yes, details of company directors submitted to Companies House at the time of their appointment are available on public record. However, home addresses and the “day” part of the director’s date of birth are excluded from public view.
If a director chooses to use their residential address as their service address, both the residential and service addresses will be made available to the public.
How to remove a company director
A company director can be removed for various reasons, but the process must adhere to the Companies Act 2006, the articles of association, the shareholders’ agreement (if applicable), and any service agreement between the director and the company.
It is crucial to ensure that your company always has at least one natural director. Therefore, if the sole director is resigning or being removed, it is important to appoint a new director beforehand or concurrently with the removal to maintain compliance.
Voluntary resignation
If a director resigns according to the terms of their contract, or if you request voluntary resignation to avoid dismissal proceedings, you must notify Companies House using Form TM01 within 14 days of the resignation. This can be done online or by post.
The public register will be updated to reflect the resignation, and you should also update the company’s statutory register of directors accordingly.
Removal under the articles of association
The model articles of association include specific provisions that mandate the immediate removal of a director under certain circumstances. These include:
- If a provision of the Companies Act 2006 or any other relevant UK legislation prohibits a director from continuing in office.
- If the director is subject to a bankruptcy order.
- If a registered medical practitioner determines that the director is physically incapable of continuing in their role.
Removal by ordinary resolution of members
If the reason for removal is not specified in the articles of association, shareholders can remove a director by passing a resolution under section 168 of the Companies Act 2006. This is typically used when shareholders are dissatisfied with a director’s performance.
As long as the reason for removal does not conflict with any applicable laws or contractual agreements, shareholders can pass an ordinary resolution with a simple majority (above 50%). For this process, shareholders must be given at least 28 days’ ‘Special Notice’ before the vote is held at a general meeting. The director must also be informed, allowing them to attend the meeting and make their case.
If the majority vote is in favor, Form TM01 must be filed with Companies House within 14 days of the removal.
Removal by the Court or other authority
A company director can be removed by the Court or other authorities if they fail to uphold their statutory duties or engage in conduct deemed ‘unfit.’ Any member of the company or the public can file an official complaint with the Insolvency Service.
A director may be disqualified by entities such as the Court, Companies House, HMRC, the Competition and Markets Authority, the Financial Conduct Authority, or a company insolvency practitioner.
‘Unfit’ conduct includes:
- Continuing to trade while insolvent, harming creditors
- Failing to maintain proper accounting records
- Failing to prepare or file annual accounts and/or confirmation statements
- Not submitting tax returns or paying liabilities to HMRC
- Not cooperating with an insolvency practitioner or the Official Receiver
How to notify Companies House
When a director is removed, Companies House must be notified by filing form TM01. This ensures the company’s records remain accurate and legally compliant. The company secretary or an authorized individual is responsible for submitting the form.
Can a company director be disqualified?
If a director fails to meet the legal obligations outlined in the Companies Act 2006 and the articles of association, they can be removed from the company and disqualified from holding a directorial position.
A disqualified director is prohibited from serving as a director in any company for the duration of the ban. Disqualification can last up to 15 years and extends to holding director positions in foreign companies with UK connections, forming or managing other companies, or being a partner in a Limited Liability Partnership (LLP).
Violating the terms of a disqualification order can result in substantial fines or imprisonment for up to 2 years.
Causes of director disqualification
A company director can be immediately disqualified for various reasons, including:
- Failing to meet the minimum age requirement of 16
- Being declared bankrupt or undergoing bankruptcy proceedings
- Being served with a Debt Relief Order
- Continuing to trade when the company is insolvent (unable to pay its debts)
- Failing to maintain accurate accounting records
- Failing to file annual accounts and/or confirmation statements with Companies House
- Not paying corporation tax or other due taxes
- Using company finances or assets for personal gain or benefit
- Neglecting any other statutory duties as per the Companies Act 2006
If a director’s conduct is in question, an application can be made to investigate through Companies House, the Court, the Insolvency Service, or an insolvency practitioner.
Upon receiving a complaint, Companies House will notify the director, detailing the allegations and the intention to proceed with an investigation. The director will also be informed of their rights to respond.
What to do if under investigation
If a director is under investigation, they should seek legal advice and choose one of the following actions:
- Await notification of a court date for disqualification
- Defend the allegations if they believe them to be untrue
- Initiate voluntary disqualification to avoid court action
After disqualification
Once a director is disqualified, their details are added to the Disqualified Directors Register maintained by Companies House, which is publicly accessible. In some cases, it’s possible to apply to the Court to revoke the ban or lift bankruptcy restrictions. However, such applications are evaluated on a case-by-case basis.
Can I resign if I am the sole company director?
If you are the sole director of a company and wish to resign while owning shares, you may appoint another director to manage the business on your behalf.
Alternatively, if the company is solvent, you can either sell the business and its assets to a new owner or dissolve (close) the company and sell its assets.
Appointing a new director to manage the company
If you want to retain ownership while transferring management responsibilities, you can remain a shareholder and appoint a qualified individual to run the business.
As a shareholder, you will maintain your ownership percentage (unless you sell some of your shares) and continue to receive surplus profits through dividend payments. However, you will still be liable for contributing the value of your shares toward company debts.
To appoint a new director, the prospective candidate must sign a letter of consent to act. Then, as the current director, you should pass a resolution to officially appoint them to the board.
Once the appointment is made, you must file Form AP01 with Companies House. After completing these steps, you can proceed with your resignation.
Selling the company and assets
A limited company is a separate legal entity from its owners, allowing you to sell it to another party.
While selling a company can be challenging, especially in uncertain financial climates, a viable, profitable, and sustainable business has a better chance of attracting buyers.
The likelihood of a successful sale depends on factors like current market conditions, your business’s valuation, the availability of buyers, financial regulations, interest rates, and market trends.
To appeal to potential buyers, your business should minimize risk by demonstrating:
- Consistent profitability (past, present, and projected future)
- A strong brand image and reputation
- A loyal customer base with high retention rates
- Relevant and in-demand products or services
- Clear growth potential
- Long-term sustainability
Selling your company is a significant decision that requires careful thought and thorough research. Explore all options, consult professional advisors, and assess the market.
If you proceed, work closely with a solicitor to ensure compliance with all legal requirements.
Closing the company
As the owner of a company, you have the right to close your business and apply for its removal from the Companies House register. To proceed, you must demonstrate the following:
- The company is solvent and can pay its bills.
- It has not traded or conducted business for at least three months.
- All debts and bills have been fully paid.
During the dissolution process, you must inform all relevant parties of your intention to close the company. Notify HMRC to settle any outstanding tax liabilities, and ensure you file final annual accounts and a Company Tax Return.
Any remaining capital after settling debts and liabilities belongs to you as the company owner.
Companies House will advertise the closure in the local Gazette, allowing third parties (e.g., creditors) to object if they have valid claims. If no objections are raised, the company will be struck off the register and officially closed within three months.
FAQs about appointing and removing a company director in the UK
What happens if I fail to notify Companies House of a director’s appointment or removal?
Failure to notify Companies House can result in penalties and non-compliance, which could impact the company’s legal standing.
Are there limits to the number of directors a company can appoint?
No, there is no legal limit on the number of directors a private limited company can appoint unless specified in the articles of association.
Can a director be reinstated after removal?
Yes, but the process depends on the reason for removal and the company’s governing documents. Shareholders may pass a resolution to reinstate a director.
How long does it take to update Companies House records?
Typically, updates to Companies House records take 24-48 hours if filed online. Postal filings may take longer.
Can a director challenge their removal?
Yes, a director can challenge their removal in court if it was done unlawfully or without following proper procedures.
What happens if a company operates without any directors?
Operating without directors is a violation of the Companies Act, and the company may be struck off the register if the situation is not rectified.
Do you have any other questions?
Appointing and removing a company director in the UK involves detailed procedures, from notifying Companies House to complying with legal obligations. By understanding the roles, responsibilities, and potential challenges, companies can ensure smooth transitions while adhering to UK company law.
For more details, check out the Startxpress Help Center and Startxpress Blog.
If you have any more questions or need further assistance, feel free to reach out to us via support@startxpress.io. Our team is here to support you every step of the way.
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