Appointing a corporate director in a limited company can seem complicated. But it’s an important step that can bring new expertise and structure to your business. If the expansion of the board or an additional layer of leadership is your aim, then the corporate directors appear pretty useful in bringing good quality decision-making and proper management.
You can appoint anyone who meets the qualifications to serve as a director of your company. Are Then, read on this step-by-step guidance and learn how to do it right.
What Do You Mean by Corporate Director?
In this context, a corporate director refers to another company assigned as a director. The purpose is to oversee another company. In this case, a legal entity, specifically another limited company, takes on the role of director in the business. Instead of some person managing the duties of a director, the company takes on that role.
Corporate directors bring value along with a package of expertise and resources and even some experience. This can be really very hard to replace by individual directors. Once again, corporate directors require an exigency of knowing since 2016 UK legislation has capped this at such a level that at least one natural person on the board should be an individual director.
How Do I Add a Director to an Existing Company?
It has always been relatively easy to add a director to an existing limited company. However, it does take quite a few formal legal steps to be in full compliance with UK law. Here’s a simple step-by-step guide about what needs to be done:
Obtain Approval from Existing Directors or Shareholders:
After selecting a new director, you must obtain approval from either the board of directors or the shareholders. It is for matters reserved for them in the Articles of Association of your company. Usually, this calls for an outright majority vote or unanimous decision.
Verify Eligibility:
Confirm that the proposed director meets all legal eligibility requirements, which we will discuss further below.
File the Appointment with Companies House:
Once a decision has been reached the company must file an appointment with Companies House. They do this online or by post using either form AP01 if the corporation is an individual or AP02 if corporate. This should be within 14 days of appointment.
Update the Company’s Statutory Register:
A Company also has to maintain a statutory register of directors. In case you are appointing a new director, then there you would be updating the details of the director within your company’s statutory register.
Notify Interested Parties:
With all such appointments, notify the stakeholders like your bank and other key partners. This ensures that you simply get correct information and do not have to guess whether the parties concerned with your business are aware of or included in the meetings and actions related to your company.
What Documents Are Required for Director Appointment in the UK?
To appoint a new director in UK limited companies, the company must complete a formal procedure and provide specific documents to meet legal requirements.
Form AP01 or AP02:
- AP01 is for a company operating with a sole director, while AP02 is for a company with multiple directors. You can submit both forms online or by pos. You need to provide the director’s name and address, country of nationality, and date of appointment.
Consent to Act:
- Newly appointed directors must issue written consent to the role. It should be in the form of a letter of consent or even part of the board meeting minutes by the company. It makes sure that the director is quite aware of the burden and agrees to take on this responsibility.
Identity Proof:
- You do not need to lodge proof of identity at Companies House. However, a company must maintain a register of the particulars of all new appointed individual and corporate directors.
Statutory Register Variation:
- You will then have to update your company’s statutory register with all the details of this new director. It doesn’t need to be filed with Companies House but must be maintained correct at all times for statutory purposes.
Articles of Association:
- The Articles of Association of the company must not prohibit corporate or individual directors. Any variation to the Articles before appointing corporate or individual directors must be passed as a special resolution.
Who Is Eligible for Director?
An individual should not be less than 16 years and there is no maximum age. Hence qualifying for a directorship in a UK limited company. There is no limit or restriction regarding nationality or residency so that directors can come from any country. Though resident anywhere in the world, they will still be liable to carry out their legal obligations as a director.
A disqualified person is anyone who cannot further act as a director of a company. Occurrence can be either due to misconduct, insolvency, or mismanagement. The prohibited by court order or disqualification undertaking cannot become the directors of companies.
For corporate directors, the entity shall be valid and satisfy all statutory requirements. Since 2016, UK law requires every company to have at least one natural person, or individual, as a director, regardless of whether other corporate directors are appointed.
Lastly, any appointee shall have agreed to, been aware of, and accepted his or her duties in the role.
Benefits of Appointing a Corporate Director:
Appointing a corporate director can offer many advantages to a limited company, including:
- Experience:
Corporate directors can carry experience concerning some specialized skills, resources, or experience that the individual director does not have. This is likely to bring in better decision-making and strategic planning.
- Management:
A corporate director will provide more extended experiences of improved managerial skills, probably when the director company has well dealt with businesses in the same sector.
- Increased Credibility:
Involving an established company as a director can increase credibility to your business, and this might lead to better partnerships and larger business opportunities.
Yes, a person can be a director of more than one company at the same time if he is able to discharge all the duties cast upon the several offices.
Existing directors or shareholders must approve the new director. File Form AP01 for individual directors and Form AP02 for corporate directors at Companies House. Update the statutory register with the details of the new director.
Any person below 16 years, as directed by the court, may declare bankruptcy against their wish or face restrictions on their activities due to some kind of misappropriation.
You must notify Companies House about an appointment of a new director within 14 days after the decision.
The process, having completed the relevant forms, should take between 24 and 48 hours if using Companies House online.
Conclusion
Hiring a corporate director would strengthen your limited company’s leadership even further and complement your board’s further indispensable expertise. You may expand your board or constitute a new layer of governance and, for the right process and legalities of an appointment to go as smoothly as possible, you need to know this process. Ensure that the director is checked for eligibility, that all relevant documentations are collected, and then follow the subsequent steps to file with Companies House.
Thus, proper selection of a natural person or corporate body as a director or chief executive is a strategic move for building a better business so that it becomes more strong.
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