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E-Quick Plan |
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 £ 125.00 | Renewal fees from £125.00 | | |
 Nominee Director Service for Public Records for one year:
 It is a perfectly legal device which preserves the privacy of an individual. It is designed to help a person who would rather not disclose their interest or association with a given corporate body.
The Nominee Director cannot and will not enter into any business contract or financial or moral commitment.
Coddan will act as Nominee Company Director for limited companies on an annual basis.
This service is primarily designed to help people keep non-trading or dormant companies fully compliant with the law and perhaps to protect the identities of the persons actually controlling the company.
At the same time the appointed nominees are not actually entitled to manage the company.
We provide the beneficial owner with a Power of Attorney empowering him to run the business, manage the company's activities and open and operate the company's bank accounts.
Nominee Director will only sign company accounts and annual returns prepared by the accountants of the company.
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Economy Plan |
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| £ 310.00 | Renewal fees from £310.00 | | |
Nominee Director For Trading Business Company:
A nominee director serves as a proxy for the owner(s) of a company and acts on their behalf. The names of the company's beneficial owners are not disclosed to any third party.
Nominee directors do not usually have an active role or function in the actual business of the company.
A nominee director is someone who in fact is renting his or her name to you. In other words, the name of this person is used and not yours for the incorporation documents.
Coddan will act as Nominee Company Director for limited companies on an annual basis.
We provide the beneficial owner with a General Power of Attorney empowering him to run the business, manage the company's activities and open and operate the company's bank accounts.
We will also include pre-signed, undated letters of resignation from nominee director, plus Notarised and Apostilled copy of Nominee Director' passport.
Nominee Director will NOT be a signatory to the company bank account nor will run the company bank account on behalf of the company.
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Premier Plan |
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| £ 1500.00 | Renewal fees from £1500.00 | | |
Nominee Director For Trading Companies:
Nominee Company Director would become part of the company day-to-day business.
In particular, Nominee Director would raise invoices, sign contracts and other business documentation.
Obviously, the Nominee Director would remain fully responsible to act only in accordance with the wishes of the owners of the company, insofar as they are legitimate.
Coddan will act as Nominee Company Director for limited companies on an annual basis.
At this stage, the Nominee Director would also control over the bank account of the company (under a separate agreement we may provide this service to act as secondary signatory only, not the primary signatory).
It is the only truly effective solution to shield the beneficial owner of the company from any undesired link to the company.
Obviously, it is also the most costly one, because it would involve management fees based on time spent.
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Nominee Directorship How it Works:
Sometimes, for tax or other reasons a person does not wish to be seen as associated with a company, or be seen as a beneficiary of a company, Nominee Director Service is the answer.
A nominee director is someone who in fact is renting his or her name to you.
Nominee Director signs the Memorandum and Articles of Association to form your entity.
The nominee will sign a General Power of Attorney document, which gives you full power to manage your company.
The nominee will give you his signed and undated letter of resignation document, which gives you the peace of mind that he can't act against you.
The above information is general and is intended as a summary only.
Clients should seek further clarification if required before deciding if they wish to engage nominee directors.
We expressly reserve the right to provide this service to anyone for any reason.
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(click here for other packages)
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| 1. Section 283(1) of the Act says every company must have a secretary. Section 283(2) states that a sole director cannot also be the secretary.
2. The company secretary of a private limited company needs no formal qualifications.
3. The company secretary usually undertakes the following duties: Maintaining the statutory registers.
4. Ensuring that statutory forms are filed promptly.
5. Providing members and auditors with notice of meetings.
6. Sending the Registrar copies of resolutions and agreements.
7. Supplying a copy of the accounts to every member of the company, every debenture holder and every person who is entitled to receive notice of general meetings - also copies demanded by anyone under section 239 of the Act.
8. Keeping, or arranging for the keeping, of minutes of directors' meetings and general meetings.
9. Ensuring that people entitled to do so, can inspect company records.
10. Custody and use of the company seal.
 +44 (0) 207.748.3039
+44 (0) 800.081.1510
(0) 870.080.2320
 info@coddan.co.uk |
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- DEAR VISITORS, If you want to become familiar with the description and the contents of English companies formation packages, offered by Coddan and to find above, what kind of service is included in this or that companies creation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the company formation within foreign countries, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen. The basic document package we provide will not differ significantly from that available at a major corporate law office.
Form a company online in minutes at lawyer-free prices. Coddan was developed by expert attorneys with experience at the most prestigious law firms in the country. We've helped over 50,000 satisfied customers, and our know-how allows us to prepare legal documents quickly and efficiently. Our documents contain advanced provisions that are not found in simple "do-it-yourself" kits or manuals. Coddan lets you take care of common legal procedures without ever leaving your home or office. We're open 24 hours a day, 7 days a week. Our research area contains plenty of helpful guidance. Simply answer an easy-to-understand questionnaire, and Coddan takes care of the rest - no need to download, no need to print. You will receive the completed legal documents printed on quality acid-free paper.
Did you know that 70% of those who try to complete their own legal documents make mistakes? With Coddan, you can rest assured, knowing that your documents are treated with the utmost care and attention. Before you submit your order, Coddan will review the answers you provide on the questionnaire for consistency, completeness, spelling and grammar. Furthermore, our customer service specialists are available to answer your questions by phone or e-mail. Call us toll-free at (0) 800.081.1510 or (0) 870.080.2320.
With Coddan's lawyer-free service, you can save up to 100% off the rates an attorney would charge for the same procedure. In addition, our fees are "per project", not "per hour," so you will know exactly what the total price will be.
The information you provide to us is held in absolute privacy. We pledge NEVER to sell your name or personal information to any third party. In addition, we go the extra mile to make sure that our servers and connections incorporate the latest encryption and security devices.
We strive to be the best legal documentation service on the web. If you are not satisfied with our services for any reason, please contact us immediately and we will either correct the situation or provide a refund, your choice.
Please note » The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the formation of companies and electronic filing of Companies House forms. We are not able to guarantee that any such filing will be acceptable to Companies House, nor are there any contractual obligation upon us to do so. If Companies House rejects formation or other electronic filing, we will credit your account with a full refund and the contract between us will be made void. Companies House does not offer a cancellation facility for the formation of companies or the electronic filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site (www.coddan.co.uk) are in Great British pounds.
Live Help » Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours our business center will be closed. When you click on the button you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is absolutely free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
 Company Directors. Introduction
Each limited company formed in the United Kingdom must have a company secretary, and a minimum of one director/shareholder. The company secretary and the company director can't be the same person. As a director of a private limited company, you normally have a maximum of 10 months from the accounting reference date in which to deliver your company's accounts to the Registrar. The accounting reference date is the date to which your accounts must be prepared.
The company secretary is one of the two officers that every company must have to fulfil the basic requirements of UK Company Law. Even if the director conducts day-to-day business entirely alone it is a requirement that another person takes on the role of secretary. Coddan performs this role for clients who do not have a suitable person willing to accept the role or for non-UK residents who require a signatory within the United Kingdom.
The Companies Act 1985 requires every private company to appoint at least one director and every public company to appoint at least two. Directors usually manage the business of the company on a day-to-day basis. However, the Act does not require this, nor does it confer on them any power to do so, either individually or as a body. Under the common law, a company's powers must be exercised by its members in general meeting unless its memorandum or articles of association provide otherwise.
Several factors must be taken into account when determining the extent of the directors' powers. For example, the directors cannot exercise a power that the company itself does not have. A company's powers are set out in the objects clause in its memorandum of association.
Most articles include what is known as a general management clause. This clause usually gives the directors all the powers necessary to manage the company on a day-to-day basis. The powers are limited by the objects clause and other provisions in the memorandum or articles. In addition, the Act gives the members certain rights and powers that cannot be excluded by the articles.
The articles are deemed to be a contract between the members and the company which governs the way the company is run. It follows that the only way the shareholders can interfere in matters delegated to the directors is to change that contract (i.e. to amend the articles by special resolution so as to restrict the directors' discretion) or to issue directions in accordance with procedures contained in the articles. Even then, such resolutions or directions will have no effect on the validity of any transaction previously entered into by the directors on behalf of the company.
Company directors are appointed by the shareholders on whose behalf they manage the company. The Companies Act requires disclosure of the first directors and the company secretary of any company, on registration. This statement must accompany the memorandum of association, and contain the directors' "consent to accept office". The company must notify the registrar of companies within 14 days of any change in its directors, or in the details set out in the register of directors. Any notification of a change in the composition of the board must be accompanied by a signed consent for the new director to act as such.
It is not normally practicable for the members to manage the business on a day-to-day basis. Every matter requiring a decision would have to be put to a general meeting called in accordance with the formal requirements of the Act. This would be impossible for a company with hundreds of shareholders. Even where there are relatively few members, it is easier for them to manage the company as directors rather than as members. This is mainly because the formalities associated with board meetings are less onerous, but also because that is the way most companies are run and doing it in any other way would complicate matters unnecessarily and probably involve significant legal expenses.
In practice, the articles of most companies delegate wide powers of management to the directors. Generally speaking, these powers must be exercised by the board of directors collectively (i.e. at a board meeting). However, the articles may allow the directors to act by written resolution. They may also allow the directors to delegate their powers to some other individual or body.
In the UK, all directors are members of the same board and usually have one vote each. Under this unitary system, each director has an equal say in matters put to the board (although the chairman may sometimes have a casting vote). Articles usually allow the board to appoint one or more of the directors to some sort of executive office within the company (e.g. managing director) and to delegate any of its powers to them. These executive directors are usually salaried and manage the business of the company on a full- or part-time basis. Directors who are not executives are known as non-executive directors.
The function of the board will be to take decisions that are outside the authority of the executive directors and to set the company's strategic objectives. Non-executive directors often play a key role in monitoring the performance of the executives and setting their pay.
On the continent, two-tier board systems are more common. The company is managed on a day-to-day basis by an executive board which is appointed by and accountable to a supervisory board. The supervisory board fulfils the monitoring role performed by non-executive directors in the UK and may include shareholder and employee representatives. The system is appealing to purists as it places the non-executives above the executives in the structural hierarchy. However, it is debatable whether these structural differences make it any easier for the part-time directors to supervise the executives.
The main advantage of the unitary system is said to be that it enables the non-executive directors to contribute more effectively to the formulation of the company's strategy and to monitor the performance of the executives; its major disadvantage is that it is more difficult for the non-executive directors to be impartial and independent. These criticisms were addressed in respect of listed companies in 1992 by the Committee on the Financial Aspects of Corporate Governance, chaired by Sir Adrian Cadbury. The committee produced a code of best practice for listed companies (the Cadbury Code) which made recommendations on the constitution of boards of directors and the role of non-executive directors.
These recommendations were subsequently consolidated, together with the recommendations of the Greenbury Committee on directors' remuneration, into the Combined Code on Corporate Governance. The Combined Code recommends that the board should include non-executive directors of sufficient calibre and number for their views to carry significant weight in the board's decisions, and that non-executive directors should comprise not less than one-third of the board (Combined Code, para. A.3.1). It also recommends that a majority of the non-executive directors should be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. Non-executive directors considered by the board to be independent in this sense should be identified in the annual report (Combined Code, para. A.2.2). The main purpose of this recommendation is to allow investors to make their own assessments as to the independence of the nonexecutive directors and therefore to make their own judgements as to whether the company is complying with these and other recommendations in the Code (e.g. regarding the constitution of the audit, remuneration and nomination committees).
All directors, whether executive or non-executive, have the same responsibilities and liabilities. These responsibilities and liabilities extend to those who act as if they were directors, although not formally appointed, and to "shadow directors", that is those in accordance with whose directions or instructions the company's board of directors is accustomed to act. The responsibilities and liabilities of directors to the Company and its shareholders are governed by the Companies Acts 1985-1989, Insolvency Act 1986 and Company Directors Disqualification Act 1986. The directors may have personal liability under other legislation, for example the Theft Act, legislation relating to workplace health and safety, financial services and environmental legislation.
The basic duties of a director of any UK company are laid down in Company Law. To quote from Butterworths Company Law Guide: "Directors must act bona fide in the interests of the company and must not exercise their powers for any collateral purpose. A director must not place himself in a position where his duty to the company and his personal interests conflict and he must not profit from his position as a director. In addition, a director must exercise reasonable care and such skill as might reasonably be expected of a person of his knowledge and experience." There are two things worth noting here. One is that the directors duty is to the company and not to shareholders, so shareholders cannot usually sue in English law for perverse acts by directors except in the case of outright fraud. Secondly there is no requirement for particular expertise when directors are appointed - so if an idiot with no financial knowledge whatsoever is appointed to the position of financial director, and he performs to the best of his abilities, then that is OK. Indeed, as the roles of individual directors are not defined, there is no necessity to even have a "finance director".
Company law actually says nothing about director selection, very little about their appointment terms and almost nothing on the operation of company boards. As a result, much of this depends on historic practice in the UK.
- Directorial Authority
The Articles may confer power upon the board to appoint a managing director and executive director. The managing director usually accepts a greater measure of responsibility for the company's overall affairs as a consequence of delegation by the rest of the board. An executive director accepts responsibility for one particular area of the company's activities, such as a sales, marketing or financial director.
The shareholders do not retain much control of the day-to-day administration of the company's affairs. They often do not have much influence on the formulation and implementation of policy either. This abdication of power into the hands of the board of directors is often recognised in the articles of association, which are a contract between the company and the shareholders.
- Directors' Authority to Bind the Company
The directors and secretary exercise their managerial powers as agents of the company. The power of the directors to bind the company is determined by agency principles. An agent's power to bind his principal is based upon the concepts of actual, usual and apparent authority.
Directors' authority to bind the company: actual authority is the power which the principal has expressly conferred upon his agent. Usual authority is determined by the nature of the agency itself, and is the power which an agent of that type usually has. Apparent authority is where the principal represents to third parties that the agent's authority extends beyond his actual or usual authority.
A company officer has the power to bind his company to the extent of his authority, be it actual, usual or ostensible.
- Directors Responsibilities
Directors responsibilities: keeping proper books of accounts and preparing accounts for presentation to the company's shareholders. Filing accounts and returns annually with the Registrar of Companies. Informing the Registrar of Companies of the appointment or retirement of any director or the company secretary. Informing the Registrar of Companies of any change in the situation of the company's registered office. Appointing auditors. Calling and holding annual general meetings (at which annual accounts are presented). Making sure that the company acts strictly in accordance with the powers and rules set out in its Memorandum and Articles of Association.
- Directors Liabilities
If a company in insolvent liquidation can be shown to have traded while insolvent before the liquidation, the Court may make an Order under the Insolvency Act 1986 requiring directors to contribute personally to make-up any deficiency in the company's assets - providing the directors knew, or ought to have known, that there was no alternative to an insolvent liquidation and failed to take every step necessary to minimise loss to creditors. Trading while insolvent in these circumstances is known as "wrongful trading".
Directors of a company which has gone into insolvent liquidation may also be ordered to contribute personally if it can be shown that any business had been carried on prior to liquidation for any fraudulent purpose or intent to defraud creditors. This is known as "fraudulent trading".
- Directors Disqualification
Disqualifications often relate to new companies deliberately established to avoid the debts of insolvent predecessors. A disqualification order is made by the court, and the 1986 Act provides three "divisions" of disqualification. There are disqualifications for general misconduct in connection with companies, disqualifications for unfitness either where a company has become insolvent or where it has been investigated, and other cases of disqualification. If a person is convicted of an indictable offence in connection with the promotion, formation, management or liquidation of a company, or with the receivership or management of a company's property, a disqualification order may be made against him. The maximum period of disqualification under this section is five years if the order is made by a court of summary jurisdiction, or 15 years in any other case.
Persistent Breaches Of Companies Legislation: A disqualification order may also be made against a director for being persistently in default of the statutory provisions under which returns, accounts or documents must be filed with or disclosed to the registrar of companies. A "persistent default" arises where, in the five years ending with the date of application for the disqualification order, the director has been adjudged guilty of three or more defaults in relation to those provisions. The maximum period for disqualification under this section is five years.
Fraud In Winding Up: A maximum 15-year disqualification order may be imposed by the court for fraud during the winding up of a company.
Disqualification For Unfitness: The first case for disqualification because of unfitness is where the company is insolvent and cannot pay its debts, where an administration order has been made, or where an administrative receiver has been appointed. The second case is subsequent to an investigation of the company under the Companies Act.
Consequences Of Contravention: Criminal penalties await persons who act in contravention of a disqualification order. The offence may result in imprisonment for not more than two years and/or a fine, or imprisonment for not more than six months and/or a fine, for convictions on indictment or summary convictions respectively. The Act also enables the court to ‘look through' companies who commit the offences, to prosecute persons responsible for the contravention, or with whose consent or as a result of whose neglect the offences were committed. A register of disqualification orders is maintained by the Secretary of State.
There is no contravention if the director obtains the court's leave to act as director of a particular company or companies while subject to a disqualification order. The court may grant interim leave for a disqualified director to act in the period before the application for leave is heard if proper undertakings are given.
Resolution To Remove Director: A company can remove a director before his office was due to expire. This can be done by an ordinary resolution of the company, for which special notice is given. A copy of this notice must be sent to the director the company seeks to remove, who is given the opportunity to address the shareholders at the meeting at which the vote is to be taken. Accordingly, the decision to remove a director in this way cannot be made by written resolution. The director can also require the company to circulate any written representations that the director may wish to make to the shareholders who received notice of the meeting. The company cannot contract out of the right to remove directors under s. 303. However, it may be impossible to obtain a majority vote under s. 303, if the articles provide for weighted voting rights for particular shareholders on a resolution to remove a director from office.
- Directors Duties
The duties owed by directors to the company fall into two distinct classes: a duty of care, and a fiduciary duty.
Duty of Care: a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. If directors act within their powers, if they act with such care as is reasonably to be expected from them, having regard to their knowledge and experience, and if they act honestly for the benefit of the company they represent, they discharge both their equitable as well as their legal duty to the company. It is another way of saying that directors are not liable for errors of judgment. A director is not bound to give continuous attention to the affairs of his company. He is not bound to attend all such meetings, though he ought to attend whenever, in the circumstances, he is reasonably able to do so. In respect of all duties that, having regard to the exigencies of business, and the articles of association, may be properly left to some other official, a director is, in the absence of grounds for suspicion, justified in trusting that official to perform such duties honestly.
Fiduciary Duty: In the normal course of the governance of the company's affairs, the fiduciary duties of the directors are owed to the company alone. This means the company as a separate legal entity, not the shareholders. Creation of a collateral duty to shareholders will depend on the facts and circumstances of a particular case. The directors should also remain impartial as between different groups of shareholders in the same company. However, the directors cannot place the interests of the group of which their company is a member above those of the company itself.
Duties Towards Creditors & Employees: While a company is solvent, its directors do not owe strictly defined fiduciary duties to the company's creditors, but are placed under a statutory obligation to consider the interests of employees. The duty of directors to take into account the interests of creditors is indirectly enforced through the rules which call for the directors to maintain capital levels, and which impose personal liability for fraudulent trading and wrongful trading immediately before liquidation.
Nature Of Directors' Fiduciary Duty: The directors should act bona fide in the interests of the company, and not for any collateral purpose. They must exercise their discretion bona fide in what they consider, not what a court may consider, is in the interests of the company. The courts are reluctant to interfere with the honest exercise of directors' discretion. The interests of the company are identified as those of the members as a whole. This embraces both current and future members, and necessitates the balancing of current and future benefits to the company.
Directors Profiting From Their Position: An important consequence of a director's fiduciary duty to his company is the prohibition placed upon him from profiting from this position. In cases where the courts have found the director to have done so, he has been made liable to account. However, it is possible for the company to agree to a director profiting from his position. Such agreement will be effective only if made after full disclosure to the company of the terms of the proposed transaction.
- Exemptions on Loans to Directors
An exemption of £5,000 for loans to each director is provided, from all companies within the same group. "Quasi-loans" are exempted if they are repayable within two months and the amount outstanding does not exceed £5,000. A further exemption is conferred for loans to directors which are made to meet expenditure incurred by them for purposes of the company's business, or to enable directors to perform their duties. The approval of the company in general meeting must be obtained and the total value of such loans outstanding cannot exceed £20,000. A company can also enter into credit transactions on behalf of directors, or persons connected with them, up to a value of £10,000 per director. Also outside the prohibitory rules are money-lending companies.
- Directors Treated Differently From Guilty Company
The Court said that when an individual was ordered to pay a fine over a certain period there were arguments for keeping the period of that continuing punishment within bounds. Those arguments were much weaker in the case of a corporate defendant. A company would not be afflicted with the same sense of anxiety as an individual would be liable to be afflicted with. It was acceptable on proper facts and in appropriate circumstances for a fine to be payable by a company over a substantially longer period than might be appropriate in the case of an individual.
While it was right that the court must avoid the risk of double punishment where directors of small companies were likely also to be the shareholders (and thus the main losers if a severe sanction were imposed on the company), it was also important that in many cases fines be imposed which made quite clear that there was a personal responsibility on directors and that they could not shuffle off their responsibilities onto the company of which they were directors.
- Executive Directors
An executive director is a director who holds some executive or management position within the company. Under Table A, the directors may appoint one or more of their number as managing director or to any other executive office (e.g. finance director) and determine the terms and remuneration of any such appointment. These powers are special powers which cannot be delegated by the board under reg. 72. The appointment of executive directors and the terms of such appointments must therefore be approved by a resolution of the board, unless the articles specifically allow another person or body to make appointments.
Regulation 72 allows the board to delegate its powers to individual executive directors. In delegating its powers, it may limit the executive's authority by imposing certain conditions. For example, the managing director may be given power to authorise capital expenditure up to a certain value with any expenditure above that amount requiring board approval. The terms of any delegation should be approved by a resolution of the board.
Salaried executive directors should be appointed under a formal service agreement which should state the title of the job to be performed, the duties to be performed, the remuneration and other benefits associated with the appointment (including whether the remuneration payable is inclusive or exclusive of any director's fee that may be payable) and any restraints in the form of confidentiality undertakings and restrictive covenants in the event of leaving the service of the company. With regard to the duties to be performed it is normal for the service contract to include a more general provision stating that the director shall have such powers and duties as the board may determine from time to time. This allows the board to modify authorisations generally without having to modify each executive director's contract. Limits on individual directors' authorities may also be reinforced by the adoption of a schedule of matters reserved to the board.
The executive directors will be subject to any provisions in the articles on retirement by rotation, unless the articles specify otherwise. Under Table A, executive directors are exempt from retirement by rotation but not from the requirement to retire at the first annual general meeting following their appointment. The Combined Code recommends that all directors should retire and offer themselves for re-election at least once every three years (Combined Code, para. A.6.2).
- Non-Executive Directors
Non-executive directors are directors who have not been appointed to any executive office within the company. The distinction between executive and non-executive directors will not always be clear-cut, particularly where the status of the chairman is concerned. The Combined Code recommends that the board should include non-executive directors of sufficient calibre and number for their views to carry significant weight in the board's decisions, and that non-executive directors should comprise not less than one-third of the board (Combined Code, para. A.3.1). It also recommends that a majority of the nonexecutive directors should be independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. Nonexecutive directors considered by the board to be independent in this sense should be identified in the annual report (Combined Code, para. A.2.2). The main purpose of this disclosure obligation is to allow investors to make their own assessment as to the independence of the non-executive directors and therefore to make their own judgement as to whether the company is complying with other recommendations in the Code (e.g. regarding the constitution of the audit, remunerations and nomination committees). Various people have produced guidance on the criteria that should be used when assessing the independence or otherwise of non-executives. The most influential is probably issued by the National Association of Pension Funds (with the support of the Association of British Insurers), who together can claim to represent the vast majority of institutional investors.
According to this guidance a nonexecutive director will be assumed by the ABI and NAPF to be independent unless, in relation to the company, the director: was formerly an executive. Is, or has been, paid by the company in any capacity other than as a non-executive director. Represents a trading partner or is connected to a company or partnership (or was prior to retirement) that does business with the company. Has been a non-executive director for nine years, i.e. three three-year terms. Is closely related to an executive director. Has been awarded share options, performance-related pay or is a member of the company's pension fund. Represents a controlling or significant shareholder. Is a new appointee selected other than by a formal process. Have cross-directorships with any executive director. Is deemed by the company, for whatever reasons, not to be independent.
Whether or not they are independent, non-executive directors participate in the management of the company by attending board meetings and any committees of the board of which they are a member. Reg. 72 of Table A does not allow the board to delegate any of its powers to an individual non-executive director. However, the same result can be achieved by delegating to a board committee consisting of only one non-executive director.
Under Table A, all directors are entitled to be repaid any expenses that they reasonably incur in connection with their duties. However, the fees paid to directors in their capacity as board members must be approved by an ordinary resolution of the members in general meeting. This applies to fees paid to executive and non-executive directors, although executive directors usually receive a salary instead of directors' fees and those salaries may be determined by the board without reference to the members. Regulation 82 is frequently modified to enable the board to fix the fees of nonexecutive directors without reference to the members.
- Alternate Directors
An alternate director is someone appointed by a director to attend and vote at board meetings in their stead. The Act does not authorise a director to appoint an alternate or a proxy. Accordingly, an alternate director may only be appointed if the articles make specific provision, e.g. regs 65 to 69 of Table A.
- De Facto and Shadow Directors
De facto directors are people who act as directors and are held out to be directors by the company even though they have never actually been appointed as directors or have ceased to be directors. A shadow director is a person in accordance with whose instructions the directors of the company are accustomed to act. A person is not deemed to be a shadow director by reason only that the directors act on advice by that person in a professional capacity. It is probably not possible for a person to be both a shadow director and a de facto director. Typically, the former tends to lurk in the shadows, sheltering behind others who, it is claimed, are the only directors of the company. The latter is a person who claims to act and purports to act as a director, though not validly appointed as such.
De facto directors and shadow directors can both be disqualified under the Company Directors Disqualification Act 1986 and may be liable for wrongful and fraudulent trading under the Insolvency Act 1986. Shadow directors are subject to some of the duties and penalties prescribed by the Companies Act 1985.
- General Management Clause
Articles invariably contain a provision (known as the general management clause) that reverses the common law rule that the company's powers must be exercised by the members in general meeting. Regulation 70 of Table A is typical of this type of provision. It provides:
Regulation 70 of Table A. Subject to the provisions of the Act, the memorandum and the articles and to any directions given by special resolution, the business of the company shall be managed by the directors who may exercise all the powers of the company. No alteration of the memorandum or articles and no such direction shall invalidate any prior act of the directors which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the directors by the articles and a meeting of directors at which a quorum is present may exercise all powers exercisable by the directors.
All the powers of the company that are not specifically excluded or reserved to the members by other provisions in the memorandum or articles or the Act. It also provides a special procedure under which the members in general meeting can give valid instructions to the directors.
It has been held that a general management clause giving the directors all powers 'necessary in the management of the company' does not authorise them to present a winding up petition without the approval of the members because winding up is not connected with the management of the company. Although directors now have a statutory power to apply for a compulsory winding up under the Insolvency Act 1986, their powers may be subject to other limitations where this wording is adopted. Modern articles seek to avoid this problem by conferring powers on the directors without the condition that they be exercised in the management of the company. Regulation 70 of Table A uses the words 'the business of the company shall be managed by the directors who may exercise all the powers of the company'.
Under a general management clause it is usually safe to assume that the directors can do anything the company can do as long as they are not prevented from doing that thing by the Act or another provision in the memorandum or articles. Thus in Re Patent File Co. (1870) LR 6 Ch. 83, Mellish L.J. said: The articles give to the directors the whole powers of the company, subject to the provisions (of the articles and) of the Companies Act... and I cannot find anything either in the Act or in the articles to prohibit their making a mortgage by deposit.' There are, of course, exceptions to this rule.
The directors may not do anything that would be a breach of their fiduciary duty to the company unless the articles give them specific powers in that regard (e.g. pay themselves a salary). In addition, they may not delegate their powers unless the articles so provide. This might not appear very helpful to directors, who would no doubt prefer the articles to contain a list of things that they can do. However, such an approach would be unwieldy. The relevant article would need to be similar in nature, but perhaps longer, than the objects clause in the memorandum. As such, it is doubtful -whether directors would actually find it any easier. Indeed, the objects clause is the closest the directors will get to a list of their powers, although this will not be of much assistance if the company adopts the short form object authorised by s. 3A of the 1985 Act (i.e. to be a general commercial company). In this case, s. 3A states that the company has power to do anything that is incidental or conducive to the carrying on of any trade or business by it.
- Subject to the Provisions of the Act
All powers conferred on the directors by the articles are subject to the provisions of the Companies Act 1985 (as amended), whether or not this is stated in the articles. Thus the directors cannot exercise any of the company's powers that are reserved to the members by the Act and must comply with the requirements of the Act when exercising their powers. For example, directors cannot allot new shares unless they have been authorised to do so in accordance with the requirements of s. 80.
The Act also requires the directors to have regard to the interests of employees, imposes restrictions on the making of loans to themselves (Part X of the Act) and generally imposes duties on the directors to comply with certain procedural requirements when exercising their powers, e.g. to keep minutes of their meetings.
- Subject to the Memorandum and Articles
The general management clause is always expressed as being subject to other provisions in the memorandum and articles of association.
These may include provisions that: limit the capacity of the company and therefore the directors. Limit the powers of the directors (but not the members), e.g. a limit on directors' borrowing powers. Reserve certain powers to the members, e.g. to approve the payment of dividend (although the articles may allow the directors to pay an interim dividend without reference to the members). Determine the procedures that the directors must follow when exercising their powers, e.g. regulation of proceedings at meetings of directors. Allow the directors to delegate their powers. Relax the conditions that members must satisfy in order to exercise certain statutory rights, e.g. the articles could allow members holding less than one-tenth of the voting shares to demand a general meeting (the company cannot exclude the members' minimum statutory rights. Provide additional procedures for removal of directors, e.g. by extraordinary resolution.
- Appointment of Other Agents
Articles usually give the directors specific power to appoint other agents. For example, reg. 71 of Table A provides:
The directors may, by power of attorney or otherwise, appoint any person to be the agent of the company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers.
It is noteworthy that reg. 71 specifically states that the board may authorise an agent to delegate all or any of his powers. The power to appoint an agent would normally be deemed to include this power.
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