ACCA F4 - Corp and Business Law (ENG)

272 18: Company directors  Part F Management, administration and regulation of companies

1.7 Number of directors

Every company must have at least one director and for a public company the minimum is two. There is no

statutory maximum in the UK but the articles usually impose a limit. At least one director must be a

natural person, not a body corporate. A company may be a director. In that case the director company

sends an individual to attend board meetings as its representative.

1.8 The board of directors

Companies are run by the directors collectively, in a board of directors.

The board of directors is the elected representative of the shareholders acting collectively in the

management of a company's affairs.

One of the basic principles of company law is that the powers which are delegated to the directors under

the articles are given to them as a collective body. The board meeting is the proper place for the

exercise of the powers, unless they have been validly passed on, or 'sub-delegated', to committees or

individual directors.

1.9 The Chair

According to the UK Corporate Governance Code, a company's Chair (or Chairman) is responsible for

leading the board and ensuring its effectiveness. This is a very distinct role from that of the CEO/MD, who

is responsible for leading the company’s operations. The Chair’s power may be contained within the

company's articles of association and they should be independent of the company when they are

appointed.

2 Appointment of directors

The method of appointing directors, along with their rotation and co-option is controlled by the articles.

As we saw earlier, a director may be appointed expressly, in which case they are known as a de jure

director. Where a person acts as a director without actually being appointed as such (a de facto or

shadow director) they incur the obligations and have some of the powers of a proper director. In addition,

a shadow director is subject to many of the duties imposed on directors.

2.1 Appointment of first directors

The application for registration delivered to the Registrar to form a company includes particulars of the first

directors, with their consents. On the formation of the company those persons become the first directors.

2.2 Appointment of subsequent directors

Once a company has been formed further directors can be appointed, either to replace existing directors

or as additional directors.

Appointment of further directors is carried out as the articles provide. Most company articles allow for

the appointment of directors:

 By ordinary resolution of the shareholders, and

 By a decision of the directors.

However the articles do not have to follow these provisions and may impose different methods on the

company.

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