Any person can be a company director provided that they:
- Have not been restrained by court order from doing so.
- Are not an undischarged bankrupt
- Are not subject to UK government restrictions.
Shareholders (owners) appoint the company director and the director is answerable to them. Apart from the prestige of title being director has other important responsibilities, including:
- The power to enter into credit arrangements and make purchases on behalf of the company.
- Ensure correct documentation is submitted to the Companies House Registrar on time, and in correct format ( able to be scanned). Failure to provide in proper timescales is punishable by fine or imprisonment.
- See company stationary shows the full and correct information.
- To act honestly and in the best interests of the company at all times.
There is some protection over liability for the debts of the company BUT the director can still be held personally liable if they have been fraudulent or negligent. This includes running the company while insolvent. Directors must always aware of the company's financial status.
Regular meetings should be held with full minutes are taken and signed off on. If disagreements to decisions arise it should be mentioned in the minutes. In the law, no distinction is made between non-executive directors and directors. The same obligations and rules apply to both.
Documents to go to Companies House
- Annual Accounts
- Annual Return
- Any notices regarding a change in positions, e.g. Director, company secretary. Changes in company address or the account reference date. Shares allotment notification, special resolutions as well as details of security of debt ('mortgage' or 'charge') created by company.
Remember: Accountants nor financial advisers are responsible legally for information reaching the Registrar. Company director/s hold sole responsibility for this.
Failure to lodge necessary documents by said time can result in the company being prosecuted and fined (up to £1000 for limited company. More for PLC). The Registrar can also make the decision to dissolve the company. He will do so if he believes it is not trading. If this happens all assets, bank accounts and property, then are the property of the crown. On average, over 1000 directors are prosecuted per year, according to Companies House. This is directly related to failure to lodge Annual Accounts or Annual Returns in the required time.
Annual Accounts
Filed with the registrar for all limited companies, even if company is not actually trading. Must include the following:
- Profit and Loss account (income and expenditure if CIC or non-profit)
- Balance sheet signed by director
- Report from director signed by either director or company secretary
- If turnover is in excess of £5.6 million, or balance sheet totals more than £2.8 million, an Auditor's report will also be required from a qualified Auditor.
Annual Returns
The purpose of the annual return is to confirm the basic information about the company at that time. Details like director's and secretary's name, registered office address, names of any shareholders and amount of shares each holds.
Submitting your Documents
Registrar only allow hard copy documents. No emails of faxed documents. Documents need to be in a format able to be scanned. Follow these guidelines:
- Use black in only
- Bold letters, standard type. No fancy fonts.
- Photocopies or carbon copies are not to be used.
- Dot matrix printer documents are not to be used.
- A4 paper in portrait format. (not landscape)
- Standard matt paper only, not glossy.
