What is the difference between a director and a company secretary?

When you run a private limited company in the UK, it’s important to consider who will be a company director and if you want to nominate a company secretary.

Private companies must have at least one company director. You do not need a company secretary but there can be benefits to having one or outsourcing this work as far as company responsibilities and company legislation are concerned.

In this blog we look at the roles of both company directors and secretaries.

The roles of a company director and company secretary

Directors are legally responsible for running private companies and making sure company accounts and reports are properly prepared. Limited companies must have at least one director, a public limited company requires at least two directors.

If you choose to have a company secretary for your business, then you can define what their role includes. This may look after the admin of the company’s business and provide guidance about the governance of the company as well as some financial and administration duties.

Many companies outsource company secretarial services to accountants such as dns. Many of our accounting packages include company secretarial duties as standard.

The definition of a company director

A company director is a person who is registered at Companies House as a director of that limited company.

If you are registered at Companies House as a company director, it also makes you a member of the Board of Directors. If a company has only one director, then the Board of Directors has only one member.

Who can be a company director?

The role of a director can be held by a person (sometimes called a human or natural director) or a corporate body. Private limited companies can have multiple directors as it wishes, but there must be at least one natural director always appointed.

UK companies if they are limited and registered at Companies House must have at least one director (a public company requires two directors minimum). There is no upper limit to the number of directors you can have in a company.

Human or natural directors must meet the following criteria to be appointed:

• Must be at least 16 years old
• Cannot be an un-discharged bankrupt
• Cannot be the company auditor
• Cannot be on the disqualified directors register
• Not otherwise prevented from acting as a director

For many new businesses or those switching from being a sole trader to a limited company, having only one director is common. Shareholders or guarantors to the business are often also directors of the companies they own.

What does a company director do?

A director (or, if there is more than one, the Board of Directors) is legally responsible for running the company, ensuring corporate legislation is adhered to, ensuring that legal obligations, filing and reporting requirements are met and the correct information is sent to Companies House on time. This includes duties such as filing documents and notifying Companies House of the following:

• annual confirmation statements
• annual accounts - even if the company is dormant
• any change in your company’s officers or their personal details
• a change to your company’s registered office address
• an allotment of shares
• the registration of any charges (mortgage)
• any change in your company’s people with significant control (PSCs) or their personal details

Whilst statutory reporting and regulatory compliance are key parts of a director’s role, but they also fulfil lots of other non statutory roles in a company such as:

• Business planning
• Setting company strategy and goals
• Making major business decisions
• Engagement with employees and other shareholders

Even if you hire an accountant to manage or complete the information required, you are still the person or people that are legally responsible on behalf of the company.

Duties of a company director

All duties of company directors are laid out in the Companies Act 2006. However, some of the key duties listed on the UK government website are:

Company’s constitution - You must follow the written constitution of your company. This is created when you set up your company.

Promote the success of the company - This means considering the impact your company has on others, the environment, any employees and colleagues. It also requires you to act in the interest of creditors if you are insolvent.

Independent judgement - Take advice, but always make decisions for yourself.

Exercise reasonable care, skill and diligence - Use the skills you have in the best way possible.

Avoid conflicts of interest - Do not take advantage of your position as a director to gain unfair advantages or create conflicts in business or other relationships.

Third-party benefits - Generally, you shouldn’t accept benefits from third parties that may cause conflicts of interest.

Interests in a transaction - You must tell other directors if you personally benefit from a company transaction.

Penalties & disqualification

The government can impose financial penalties and disqualify directors for failing to keep records or failing to present them to an office holder as part of a formal insolvency procedure.

Register of directors at Companies House

There is a legal requirement to notify Companies House of all directors of your company, this information is kept on the Register of Directors at Companies House. This statutory register should contain details about every director, past, and present. You must record the following information for the Register of Directors:

• forename and surname
• any former names by which they were known for businesses purposes within the past 20 years
• a service address
• the country or state (or part of the UK) where they usually reside
• nationality
• business occupation (if any)
• date of birth
• the date they were appointed as a director of the company
• the date they ceased to be a director of the company (where applicable)

Non-resident company directors

We are frequently asked can non-residents be company directors of a UK company? The simple answer is yes. There is no legal necessity for a director of a UK company to be a British national, reside in the UK, maintain a base here, or pay regular visits here.

For anyone applying to be a UK company director, the residence of that person is not important. The UK allows a UK company director after company formation to be a non-UK resident and live anywhere in the world. There is no requirement for a director of a UK company to live in the UK during or after their appointment as a company director. However, with today’s globalised world, tax compliance for non-resident directors has come under increased scrutiny from HMRC. So seek professional advice about non-domicile and personal tax from qualified accountants such as dns.

How do I appoint or remove a company director?

Shareholders and guarantors have the power to appoint and remove directors.

You can appoint and remove a director, as long as any appointment, resignation, or removal adheres to company law and your company articles of association.

You must tell Companies House as soon as possible if a director joins or leaves.

Do I need a company secretary for my company?

You do not legally need to appoint a company secretary in a private limited company, unless the articles explicitly state that a secretary must be appointed. However, some directors decide to recruit a company secretary or outsource company secretarial duties to an accountant such as dns as a way to delegate some of the director’s responsibilities.

If you are the sole director of a company, it may be worth listing your partner or spouse as company secretary (even if you then outsource the company secretarial duties to an accountant). This can help should something happen to you as the director whereby the company secretary can deal with Companies House.

What are the duties of a company secretary?

A company secretary normally has a role of supporting the directors and looking after the best interests of the company, and it tends to be more of an administrative role. It is up to you to define the role of a company secretary. Therefore, the extent of authority and functions carried out by a company secretary will vary significantly from company to company.

While day-to-day secretary duties will vary depending on the company however, main duties can include some or all of the following administrative duties:

• Maintaining statutory company records and registers, including a PSC register, details of shareholders and shares, members and directors etc.
• Ensuring the company is managed in accordance with the Companies Act 2006 and the articles of association.
• Notifying Companies House about changes to the company’s registered details.
• Filing documents – Submitting forms and returns to Companies House and HMRC.
• Preparing and filing annual confirmation statements (previously called an annual return).
• Arranging meetings – Planning shareholder meetings, directors’ meetings and board meetings, creating reports and maintaining meeting minutes and company resolutions.
• Financial duties such as monitoring the financial position of the company, notifying the directors and shareholders of any financial discrepancies or problems and maintaining accurate and up-to-date accounting records.
• Advising on governance – Guiding directors on best practices and regulatory compliance.
• Share certificates, share transfers and issued share capital – Issuing share certificates, recording the issue and transfer of shares.
• Company signatory - Signing internal contracts and prescribed documents on behalf of the company and its directors.
• Appointing advisors - Appointing solicitors, accountants, auditors.

Company secretaries can also be registered directors, and therefore can fulfil some director responsibilities. However, as a guide, the secretary generally fulfils a more administrative role in maintaining important company records, supporting and advising directors on appropriate processes, finances, policies and procedures, and ensuring necessary filings and reporting take place by the deadlines required.

Who can be a company secretary?

Anyone can be a company secretary however, the company secretary can be a director but cannot be:

• the company’s auditor
• an ‘undischarged bankrupt’ - unless they have permission from the court

How do I appoint a company secretary in a private company?

A company secretary can be appointed by a resolution of the board of directors or by the members, following receipt of a letter of ‘consent to act’ from the prospective person. Companies House should be informed of the appointment as soon as possible on Form AP03, which must include the following:

• Date of appointment
• Title, full forename(s) and surname, including any former name(s)
• Service address
• Signature of new secretary and a director

If I’m a sole director, can I also be company secretary?

The simple answer to this is yes. A sole proprietor can be a director and shareholder and has the option of also appointing themselves as company secretary.

How do I remove a company secretary in a private company?

The process of removing a company secretary is governed by the Companies Act 2006. Section 168 of the Act outlines the procedure for removing a director or secretary from office. The section provides that a company may remove a director or secretary from office by passing an ordinary resolution at a general meeting.

There is no requirement for a company to appoint a company secretary. However, if a company has appointed one, it can be removed. The articles of association of a company may require the directors to notify the secretary before their removal.

The steps can be as follows:

Step 1: Review the Articles of Association - The articles may provide for the directors’ removal of the company secretary. If the articles do not offer this, the directors must rely on the Companies Act 2006 to remove the secretary.

Step 2: Call a Board Meeting - The directors must call a board meeting to discuss the removal of the company secretary. The meeting notice must be given per the company’s articles of association or the Companies Act 2006.

Step 3: Pass a Resolution - At the board meeting, the directors must pass a resolution to remove the company secretary from the office. A majority of the directors present at the meeting must pass the resolution. Once the resolution is passed, the company secretary is deemed to have been removed from office.

Step 4: Inform the Company Secretary - The company secretary must be informed of their removal from office as soon as possible. The notice must be given in writing and include the date the removal takes effect. The company secretary should also be informed of their rights under the Companies Act 2006 to represent the company.

Summary

Private limited companies in the UK are required by law to meet certain requirements. As a company director, you will be responsible for these. However, it is likely that you will need support and guidance throughout the lifecycle of your company to fulfil these requirements.

Although you are responsible for many things in your company, it doesn’t mean you have to do all the work yourself. Appointing an experienced accountant, such as dns accountants, can provide many of the filing duties, company secretarial duties and financial duties that you have. Our team of experts have the appropriate qualifications, knowledge and experience to advise and support you to ensure you fulfil your obligations and director responsibility.

For help and support with your directors and secretaries responsibilities or are looking to outsource your company secretarial services, please contact dns today on 03300 886 686, or you can also e-mail us at enquiry@dnsaccountants.co.uk.

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