The role of a Company Secretary & Directors Flashcards
List 5 core duties of a Company Secretary
Any 5 from…
Co-ordinate and attend company and director meetings
AGM arrangements in accordance with Act and Articles
Agenda, papers and Minutes of meetings
Carry out board instructions
Ensure compliance with Articles
If listed company, ensure compliance with DTR, Listing Regime and City Code on Takeovers and Mergers
Ensure compliance with CA2006 and other legislation
Maintaining statutory books, records & registers and inspection of documents
Filing statutory returns and documents
Co-ordinate Annual Report & Accounts publication and distribution
Implement directors’ & employees’ share schemes
Safe custody and use of common seal (if applicable)
Administration of subsidiary companies
Focal point for shareholder communication, and registration of share ownership
Risk, Insurance, Pensions, Strategy, Health & Safety
What are the 6 types of Directors?
Executive
Non-Executive
Shadow
Defacto
Alternate
Co-Option
What are the only 2 eligibility criteria in the Act to satisfy appointment directors?
- Must be a least one natural director at all times
- On appointment, the person must be at least 16 years old
Who can terminate a director’s appointment?
Members may, subject to any restrictions in the Articles, appoint additional directors and can terminate a director’s appointment.
How many directors must a public company have?
At least 2 however the articles may stipulate a higher number of directors
How many directors must a private company have?
At least 1 however the articles may stipulate a higher number of directors
What is a shadow director?
A person in accordance with whose directions or instructions the directors of the company are accustomed to act. They are likely to try and conceal their involvement in the company
What is the process of appointing a Director?
- Board or nomination committee draws up profile
- Select preferred candidate, provide full details to board (details of individual, proposed remuneration, draft service contract and press release) - board approves
- Secretary writes to director confirm appointment:
request personal details for AP01 and for payment
AP01 submitted (no director signature required, ensure consent
obtained for acting as director)
if to be a signatory, get specimen signature for bank
inform of any share qualifications they must acquire
request notice of interests in the company’s contracts - If listed company, notify UKLA via a RIS (by end of business day following decision to appoint)
- Update register of directors and secretaries
- File AP01 with Registrar of Companies within 14 days
- If directors’ names appear on company stationery, amend accordingly
- Arrange induction and briefing
How can a Director be removed from office?
Regardless of the terms of a director’s service contract or any provisions in the company’s Articles, members always have the right to remove directors by ordinary resolution approved at a General meeting giving special notice.
Additionally they may resign, retire, become absent due to illness or disqualification
What is a defective appointment and what are the next steps?
If appointment of a director is found to be defective in any way, CA2006 s. 161 provides that, for the protection of third parties, any earlier acts made by the person acting as a director remain valid.
On discovering that a director’s appointment is invalid, the company secretary should take steps to work with the board to rectify the situation.
CA2006 s. 239 provides that the members of the company may ratify prior acts of directors either individually or collectively for acts of negligence, default or breaches of duty or trust.
Ratification of the prior acts of the directors collectively may be necessary where the acts of other directors would have otherwise become invalidated (for example, for lack of a quorum), if the director with the defective appointment would have been excluded.
What is a disputed appointment and what are the next steps?
CA2006 s. 1095(4A) enables a director to dispute their appointment or amend details filed in respect of their appointment and make application to the Registrar for the appointment to be struck out.
Application to the Registrar form RP06.
The Registrar will enquire of the company to ascertain whether consent was given or not and where consent cannot be proved the appointee’s details will be removed from the record.
SO, recommended get written consent to act as a director be obtained for all proposed directors prior to their formal appointment
What is the process for vacation of office?
- Receive letter of resignation
- Obtain LETTER OF ASSURANCE
- Formally minute the vacation of office
- Record in Register of Directors & Secretaries
- Form TM01 and file at Companies House within 14 days
- Pay outstanding fees/expenses, inform HMRC
- Check if share options triggered
- Remove name from any stationery
- Inform bank (if authorised signatory)
- Notify UKLA, if listed company, and issue press release
director to return all documents and property
What are the 7 duties of a Director?
S 171-177 of CA2006
- To act within POWERS
- To PROMOTE the success of the company
- To EXERCISE independent judgement
- To EXERCISE reasonable care, skill and diligence
- To avoid CONFLICTS of interest
- Not to accept BENEFITS from third parties
- To declare an INTEREST in a proposed transaction or arrangement
Can the removal of a director by the members be over-ruled by any provision in the company’s articles?
No - it cannot be overruled by any provision in the company’s Articles, contract of employment, service agreement or any other agreement (CA2006 s. 168).
Would a director have a right to damages payable if they had been removed from office?
Yes - the removal does not stop the director from being able to exercise any rights they may have to compensation or damages payable in respect of the termination of their appointment as a director before the expiry of any fixed term or without due notice.
