Limited Company Directors and Shareholders

Directors:

The directors of a company are responsible for the management of the company. They run it on a day to day basis and receive a salary. It is their duty to manage the company on behalf of the shareholders. Shareholders have the final say when appointing directors.

Directors often own shares in the company they work for:

When two or three people start a company together, they often see themselves as partners in the business. Usually, they will allocate shares to themselves and appoint themselves as directors. However, they should always be aware of the different roles of directors and shareholders.

Many large companies issue shares to directors and key employees, as part of a bonus package. Some companies insist that their directors buy shares in the companies they manage. Share ownership is intended to align directors’ interests with that of their employers; the other shareholders.

Who can be a director?

Anyone can be a director subject to the following:

• They must be at least 16 years of age
• They are not disqualified by a Court Order.
• They are not an undischarged bankrupt.

It is also worth noting that:

• A director does not need to be UK resident
• A corporate body can be a director, but a company requires at least one human director.

Information about directors

Companies House needs the following information about each director:

• First Name
• Last name
• Director’s service address, if different from home address.

If the director is a corporate body, the following information is required:

• First and Last name of authorised person
• Name of Company or organisation
• Registration Number
• Place registered
• And, if it is resident in a Non-EEA member state:
  • The law that governs it.
  • The Legal Form of organisation.

And, to deal with the absence of a signature, the answers to 3 authentication questions, taken from any of the following:

• Mother’s maiden name- the first 3 letters
• Father’s first name-the first 3 letters
• Colour of eyes-the first 3 letters
• Telephone number-the last 3 digits
• Town of birth-the first 3 letters
• National insurance number- the last 3 digits
• Passport number-the last 3 digits

Director’s Service address

Companies House will publish an address for a director, on their web site. Publication enables official notices and correspondence to be sent to directors. However, publication means that a director’s address is no longer private. In order to allow directors to retain their privacy, Companies House will also accept a service address. It is the service address that will be published. We offer directors a FREE service address, if their Company is using our Registered Service.

Shareholders

Companies are jointly owned by their shareholders, who are also known as members. A shareholder’s stake in a company is represented by the number of shares (units of ownership) he owns.

Who can be a shareholder?

Unless sanctions apply, almost anyone has the legal capacity to be a shareholder in a UK registered limited company. Individuals, trusts, partnerships, other corporate bodies and Governments, wherever resident, can be shareholders.

Subscribers

The first shareholders are the subscribers to the company’s memorandum of association. They agree to buy the number of shares allocated to them.

There are 3 ways to become a shareholder in a company:

• By subscription to the Memorandum of Association when forming a new company
• By gift or purchase of shares from another shareholder.
• By subscription to a new issue of shares by the company.

The following information is required from someone who subscribes for shares electronically:

• First Name
• Last name
• Full postal address

And, to deal with the absence of a signature, the answers to 3 authentication questions previously set out.

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