The directors of a limited company are appointed by the shareholders to run the company and are therefore answerable to the shareholders. Private Limited Companies only need to have one director but other types of Limited Companies can appoint a number of directors if they see fit. The directors effectively will be the first employees of the company.
Often, many people set up limited companies on their own and will therefore be the only shareholder, the only director and the only employee of the company!
What do company directors do?
Company directors are the people who are responsible for the overall running of the company. They are appointed by, and are answerable to, the company’s shareholders.
There are certain roles that need to be fulfilled by the directors of the company and two of the most common of these roles relate to the financial running of the business, these are dividends and annual accounts.
Dividends – Limited companies can issue dividends on their profits. This is a popular way for the owners of limited companies to take money from their business as dividends are only taxed at 10%. In order to legally take a dividend payment from the company it needs to be agreed by the directors of the company at a board of directors meeting. This is still the case if you are the only director.
Annual Accounts – The annual accounts submitted to Companies House have to be signed off by the company directors. A director will normally have to sign the balance sheet and issue a directors report on the state of the company.
Alongside these financial requirements, directors also have specific duties that relate to health and safety, tax payments and Human Resources. If you are a shareholder that is appointing directors for your company then you need to think about these responsibilities and if your potential company director will undertake them with professionalism.
Who can be a Limited Company Director?
The simple answer is pretty much anyone can be a company director as long as you meet these requirements:
You are over 16 years of age (in practice it is hard to open a company until you are 18 as you will struggle to get a business bank account).
You can’t be currently disqualified from being a director
You can’t be an undischarged bankrupt
If you have questions about limited company directors please contact our consultants on 01245 492777.