Who can be a company director? Eligibility, age limits, disqualifications

Becoming a director of a limited company can be very rewarding, but it also entails a number of responsibilities. Who can become a director in the first place?
As a director, you must also follow certain statutory rules in addition to your obligations to the company and employees.

Although almost anyone can hold the position, not everyone is suited to the role.

In fact, some individuals are disqualified from running a company.

Who can become a director?

The good news is that becoming a company director is accessible to most people. You don’t need any formal qualifications, business degrees, or professional certifications to take on the role.

You don’t need to be a UK citizen or even a UK resident. Foreign nationals can serve as directors of UK limited companies, though you will need to provide a UK registered address for official correspondence.

Directors can hold multiple directorships simultaneously – there’s no legal limit on how many companies you can be a director of at the same time.

You also have flexibility in how you engage with the company. You can be:

• A director and shareholder
• A director and employee
• A director, shareholder, and employee
• A director without being either a shareholder or an employee

The role is highly flexible, making it suitable for a wide range of business structures and arrangements.

However, there are important restrictions and requirements you should be aware of.

How many directors must a company have?

All limited companies must have at least one director.

Each director must have a UK registered address, even if they are not resident in the country.

Typical small company setup

Most small limited companies have one or two directors who are also the company’s shareholders and employees.

For example, a contractor or consultant will typically be the sole director and sole shareholder of their limited company, also working as an employee.

In a partnership-style business, you might have two directors, each owning shares and drawing a salary. Many small companies have spouses as co-directors.

This combined director-shareholder-employee structure is popular because it’s simple to administer and gives you full control over the business while allowing you to take income in the most tax-efficient way through a combination of salary and dividends.

For obvious reasons, small companies rarely need non-executive or corporate directors; these roles are more common in larger businesses with complex governance requirements.

Age limit applies

While there is no upper age limit for company directors, the 2006 Companies Act set a minimum age of 16.

Under the Act, any company with an underage director as of the implementation date must update its register of directors.

See section 159 of the Companies Act 2006 for further information.

Disqualifications

You can’t become a director if:

• You are disqualified by the company’s articles of association – the rules that relate to the running of the company
• You are an undischarged bankrupt
• You have been disqualified from being a director by a court order
• You are the company’s official auditor

It’s important to note that under the Insolvency Act (1986), as the director or shadow director of a company that has gone into liquidation, you’ll be prohibited from being a director or being involved in the formation or running of a company with the same or similar name to the liquidated company for five years.

However, directors aren’t automatically disqualified from being appointed as directors of another company if a previous company they worked for went into liquidation. In the UK, only a court can issue a disqualification order.

Service contract

You don’t have to be employed by the company or a shareholder to become a director.

However, if you work part-time or full-time, you should have a director’s service contract.

A copy of the contract should be available for inspection at the company’s registered address, and you may need to register your details with Companies House.

If you advise company directors as a lawyer or accountant, for example, you may also be legally regarded as a director or shadow director.

Duties as a director

As mentioned above, as a company director, you are in a position of trust.

The extent of your authority will depend on the company’s articles of association.

While you may have duties specific to your expertise, all directors have a number of duties and responsibilities.

Other types of directors

Non-executive directors

A non-executive director may be less involved in a company’s management but remains a full member of the board of directors and, as such, is responsible for the company’s success. Under statutory rules, the law doesn’t distinguish between the duties of executive and non-executive directors.

Corporate directors

Under existing law, UK companies may appoint a corporate director to the board, provided there is at least one natural person on the board.

However, in 2023, the Economic Crime and Corporate Transparency Act was passed, emphasising the removal of corporate directorships unless specific exemptions apply.

Corporate directors are now largely prohibited unless they meet new requirements.

Only UK corporate entities with legal personality can act as corporate directors; overseas companies are prohibited from doing so in the UK.

These director types are uncommon in small limited companies, but may be relevant depending on your company structure.

What about the company secretary role?

The company secretary role is optional for a standard limited company. Before the introduction of the 2006 Companies Act, it was mandatory. However, public limited companies (PLCs) must appoint a company secretary.

You may still decide to appoint a secretary to undertake any of the company’s administrative roles. A director can also serve as secretary, but the director(s) remain ultimately responsible for any decisions made on behalf of the company.