Directors Flashcards
How many directors must a private company have on incorporation, and what about a public company?
A private company must have at least 1 director, and a public company must have at least 2 directors.
How should a new director be appointed after incorporation?
Directors are appointed according to the company’s articles of association. The new director must consent to the appointment.
What must happen if there are any changes in directors (appointment, removal, or change in details)?
Changes must be notified to Companies House within 14 days.
What is the difference between a de jure director and a de facto director?
A de jure director is formally appointed, while a de facto director is not formally appointed but still carries out duties.
What is a shadow director?
A shadow director stands behind the board of directors and effectively controls them.
What is the role of an executive director compared to a non-executive director (NED)?
An executive director is employed by the company, whereas a NED operates as a consultant.
What are the powers of directors in a company?
Directors can make all decisions of the company unless reserved for shareholders, make decisions at board meetings, and enter into contracts on behalf of the company.
What are directors’ duties towards the company?
Directors must act in good faith, exercise reasonable care and skill, use independent judgment, avoid conflicts of interest, act within their powers, declare interests in transactions, and not accept benefits from third parties.
How can a board meeting be called and what is the quorum requirement?
Any director can call a board meeting with reasonable notice (not necessarily in writing). The quorum requirement is 2 directors.
What is required to pass a written resolution by directors?
Unanimous approval is required to pass a written resolution.
What is the procedure for removing a director?
Shareholders can remove directors by a simple majority vote. Notice of the resolution to remove a director must be given at least 28 days before the meeting, and the director must be given notice and a right to respond.
What are the responsibilities of a company secretary?
The company secretary maintains the company’s internal records and arranges filings at Companies House. Public companies must have one, but private companies do not.
Do all companies need to prepare accounts?
Yes, all companies must prepare accounts. Large companies (with an annual turnover greater than £10m and more than 50 employees) must hire an auditor.
