2. Text for reading. The Directors

A director includes ‘any person occupying the position of a director, by whatever name called’. A ‘shadow director’ is a person ‘in accordance with whose directions or instructions the directors of the company are accustomed to act’ – but excludes persons giving advice in a professional capacity and parent companies in respect of their subsidiaries. A company can be a director.

The appointment of directors

Those named in the statement of first directors and secretary are deemed appointed. Subsequent appointments are governed by the articles, which usually provide for appointment in general meeting by ordinary resolution, the board generally has a power to fill casual vacancies.

No person other than a director retiring by rotation shall be appointed a director at an AGM unless: (i) he is recommended by the directors; or (ii) not less than 14 nor more than 35 days before the date appointed for the meeting, notice by a member qualified to vote has been given of the intention to propose that person. Directors of a public company must be voted on individually unless the meeting has unanimously agreed to waive the rule, otherwise the appointment is invalid.

The retirement of directors

At the first AGM all directors retire and at every subsequent AGM one-third or the number nearest must retire being those who have been longest in office since appointment or reappointment. If the vacancy is not filled at the AGM, the director shall be deemed reappointed unless it is resolved not to fill the vacancy or unless a resolution for reappointment has been put and lost.

Age restrictions on directors

Directors of a private company which is not a subsidiary of a public company are not subject to an age limit but for public companies, a person cannot be appointed if 70 or over.

Disqualification of directors

Directors can be disqualified from acting as such either by statute or under the terms of the articles of association.

Statutory disqualification.

Under the Company Directors Disqualification Act 1986 the court may disqualify persons. Disqualified persons cannot, without leave, be a director, liquidator or administrator of a company or be a receiver or manager of a company’s property or in any way, directly or indirectly, be concerned or take part in promotion, formation or management for a specified period.

Conviction of an indictable offence. A director may be disqualified when convicted on an indictment or summarily, of an offence in connection with the promotion, formation, management or liquidation of a company, or receiveship or management of the property of the company. The maximum period of disqualification is five years (summary) or 15 years (on indictment).

Persistent breaches of companies legislation. Directors can be disqualified for breaches relating to any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the Registrar of Companies. Three or more defaults in five years constitutes a persistent breach. The maximum period of disqualification is five years.

Fraud and so on in winding-up. The court may make a disqualification order if a person:

(a) has been guilty of fraudulent trading, or

(b) has been guilty of fraud in relation to the company or breach of his duty (this includes shadow directors). The maximum period of disqualification is15 years.