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?
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.
However, every director must provide Companies House with a service address, which does not have to be in the UK, as well as their usual residential address.
The residential address is not normally shown on the public register. The company itself must have a UK registered office address.
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
However, there are important restrictions and requirements you should be aware of.
How many directors must a company have?
All private limited companies must have at least one director who is a natural person.
Each director must provide a service address and their usual residential address to Companies House.
The service address can be the company’s registered office or another address, and it does not have to be in the UK, whereas the residential address is not normally made public.
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 Companies Act 2006 set a minimum age of 16.
See section 157 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, unless you have permission from the court. Without permission, you are also prohibited from taking part in the promotion, formation or management of a company
- You have been disqualified from being a director by a court order or have given a disqualification undertaking
- You are the company’s official auditor
It’s important to note that under section 216 of the Insolvency Act 1986, someone who was a director or shadow director of a company at any time during the 12 months before it went into insolvent liquidation may be restricted from being involved with another business using the same or a similar name for five years, subject to certain exceptions.
However, this is not a general five-year ban on becoming a director of another company. Director disqualification is a separate process and can result from a court order or a disqualification undertaking.
Service contract
You don’t have to be employed by the company or a shareholder to become a director.
A director who also works for the company may have an employment or service contract, depending on the arrangement. This is separate from the person’s statutory appointment as a director.
Where a director has a written service contract, the company is subject to rules governing its retention and inspection.
Professional advisers such as lawyers and accountants are not normally treated as shadow directors merely because the company’s directors act on advice given in a professional capacity.
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.
Directors must also comply with Companies House identity verification requirements. New directors must verify their identity as part of their appointment or incorporation, while existing directors must provide their personal code with their company’s next confirmation statement. See our guide to mandatory identity checks for company directors.
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
The rules governing corporate directors have been tightened by the Economic Crime and Corporate Transparency Act 2023, with restrictions on the circumstances under which companies may use corporate directors.
For most small limited companies, this makes little practical difference, as they will simply appoint individual directors. In all cases, a UK company must have at least one director who is a natural person.
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 private limited company. Before the Companies Act 2006 was introduced, 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.