A private company must have at least one director.

A public company must have at least two directors.

A company must have at least one director who is a natural person.

This requirement is met if the office of director is held by a natural person as a corporation sole or otherwise by virtue of an office.

If it appears to the Secretary of State that a company is in breach of—

• section 154 (requirements as to number of directors), or

• section 155 (requirement to have at least one director who is a natural person),

the Secretary of State may give the company a direction under this section.

The direction must also inform the company of the consequences of failing to comply.

If the company has already made the necessary appointment or appointments (or so far as it has done so), it must comply with the direction by giving notice of them under F55section 167F55section 167G before the end of the period specified in the direction.

Nothing in subsection (4) or (5) affects the duty imposed by section 167G to give notice within the period mentioned in subsection (6) of that section.

A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding F12one-tenth of level 5 on the standard scaleF12one-tenth of the greater of £5,000 or level 4 on the standard scale.

A person may not be appointed a director of a company unless the person is a natural person.

Subsection (1) does not prohibit the holding of the office of director by a natural person as a corporation sole or otherwise by virtue of an office.

An appointment made in contravention of this section is void.

This section has effect subject to section 156B (power to provide for exceptions from requirement that each director be a natural person).

The Secretary of State may make provision by regulations for cases in which a person who is not a natural person may be appointed a director of a company.

The regulations must specify the circumstances in which, and any conditions subject to which, the appointment may be made.

Provision made by virtue of subsection (2) may in particular include provision that an appointment may be made only with the approval of a regulatory body specified in the regulations.

The regulations must include provision that a company must have at least one director who is a natural person (and for this purpose the requirement is met if the office of director is held by a natural person as a corporation sole or otherwise by virtue of an office).

F66Regulations under this section may amend section 164 so as to require particulars relating to exceptions to be contained in a company's register of directors.

The regulations may make different provision for different parts of the United Kingdom.

This is without prejudice to the general power to make different provision for different cases.

Regulations under this section are subject to affirmative resolution procedure.

In this section “the relevant day” is the day after the end of the period of 12 months beginning with the day on which section 156A comes into force.

The company must—

If an election is in force under section 167A in respect of the company, the company must, in place of doing the things required by subsection (3), deliver to the registrar in accordance with section 167D the information of which the company would otherwise have been obliged to give notice under subsection (3).

If it appears to the registrar that, as a result of subsection (2), a company should have given notice under section 167G of a person having ceased to be a director but has failed to do so, the registrar must include a note in the register recording that fact.

A person may not be appointed a director of a company unless he has attained the age of 16 years.

This does not affect the validity of an appointment that is not to take effect until the person appointed attains that age.

Where the office of director of a company is held by a corporation sole, or otherwise by virtue of another office, the appointment to that other office of a person who has not attained the age of 16 years is not effective also to make him a director of the company until he attains the age of 16 years.

An appointment made in contravention of this section is void.

This section has effect subject to section 158 (power to provide for exceptions from minimum age requirement).

The Secretary of State may make provision by regulations for cases in which a person who has not attained the age of 16 years may be appointed a director of a company.

The regulations must specify the circumstances in which, and any conditions subject to which, the appointment may be made.

If the specified circumstances cease to obtain, or any specified conditions cease to be met, a person who was appointed by virtue of the regulations and who has not since attained the age of 16 years ceases to hold office F56by virtue of that appointment.

The regulations may make different provision for different parts of the United Kingdom.

This is without prejudice to the general power to make different provision for different cases.

Regulations under this section are subject to negative resolution procedure.

A person may not be appointed a director of a company if the person is disqualified under the directors disqualification legislation (see subsection (2)).

An appointment made in contravention of this section is void.

At a general meeting of a public company a motion for the appointment of two or more persons as directors of the company by a single resolution must not be made unless a resolution that it should be so made has first been agreed to by the meeting without any vote being given against it.

A resolution moved in contravention of this section is void, whether or not its being so moved was objected to at the time.

But where a resolution so moved is passed, no provision for the automatic reappointment of retiring directors in default of another appointment applies.

For the purposes of this section a motion for approving a person's appointment, or for nominating a person for appointment, is treated as a motion for his appointment.

Nothing in this section applies to a resolution amending the company's articles.

This applies even if the resolution for his appointment is void under section 160 (appointment of directors of public company to be voted on individually).

Every company must keep a register of its directors.

The register must contain the required particulars (see sections 163, 164 and 166) of each person who is a director of the company.

A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding F37one-tenth of level 5 on the standard scaleF37one-tenth of the greater of £5,000 or level 4 on the standard scale.

In the case of a refusal of inspection of the register, the court may by order compel an immediate inspection of it.

For the purposes of this section a “former name” means a name by which the individual was formerly known for business purposes.

Where a person is or was formerly known by more than one such name, each of them must be stated.

A person's service address may be stated to be “The company's registered office”.

Every company must keep a register of directors' residential addresses.

The register must state the usual residential address of each of the company's directors.

If a director's usual residential address is the same as his service address (as stated in the company's register of directors), the register of directors' residential addresses need only contain an entry to that effect.

This does not apply if his service address is stated to be “The company's registered office”.

A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding F3one-tenth of level 5 on the standard scaleF3one-tenth of the greater of £5,000 or level 4 on the standard scale.

This section applies only to directors who are individuals, not where the director is a body corporate or a firm that is a legal person under the law by which it is governed.

The Secretary of State may make provision by regulations amending—

• section 163 (particulars of directors to be registered: individuals),

• section 164 (particulars of directors to be registered: corporate directors and firms), or

• section 165 (register of directors' residential addresses),

so as to add to or remove items from the particulars required to be contained in a company's register of directors or register of directors' residential addresses.

Regulations under this section are subject to affirmative resolution procedure.

A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding F5one-tenth of level 5 on the standard scaleF5one-tenth of the greater of £5,000 or level 4 on the standard scale.

An election may be made under this section in respect of a register of directors or a register of directors' residential addresses (or both).

The election is made by giving notice of election to the registrar.

If the notice is given by subscribers wishing to form a private company, it must be given when the documents required to be delivered under section 9 are delivered to the registrar.

An election made under section 167A takes effect when the notice of election is registered by the registrar.

The reference in subsection (1) to a register “of the relevant kind” is to a register (whether a register of directors or a register of directors' residential addresses) of the kind in respect of which the election is made.

The duty under subsection (2) applies during the period when an election under section 167A is in force.

The information (and any accompanying statement) must be delivered as soon as reasonably practicable after the company becomes aware of the information and, in any event, no later than the time by which the company would have been required under section 167 to give notice of the information.

A company may withdraw an election made by or in respect of it under section 167A.

Withdrawal is achieved by giving notice of withdrawal to the registrar.

The withdrawal takes effect when the notice is registered by the registrar.

The effect of withdrawal is that the company's obligation under section 162 or (as the case may be) 165 to keep and maintain a register of the relevant kind, and its obligation under section 167 to notify the registrar of changes to that register, apply from then on with respect to the period going forward.

Regulations under this section are subject to affirmative resolution procedure.

The notice must specify the date on which the person became or ceased to be a director of the company.

In subsection (3)(e) “permission of a court to act” means permission of a court under a provision mentioned in column 2 of the table in section 159A(2).

Subsection (1)(a) does not require a company, on its incorporation, to give notice in relation to a person named as a proposed director in the statement under section 12.

A notice under this section must be given within the period of 14 days beginning with the day on which the person becomes or ceases to be a director.

A company must give notice to the registrar of any change in the required information about a director (see sections 167J and 167K).

The notice must specify the date on which the change occurred.

A notice under this section must be given within the period of 14 days beginning with the day on which the change occurs.

Where a company gives notice of a change of a director’s service address but not their residential address, the notice must contain a statement that the residential address is unchanged.

A company must give notice to the registrar if a person named in the statement under section 12 as a proposed director of the company did not become a director on its incorporation.

But a company is not required to give notice under subsection (2) in respect of a person if it gives notice under subsection (1) in respect of the person.

A notice under subsection (2) must specify the date on which the change occurred.

A notice under this section must be given within the period of 14 days beginning with the day on which the company was incorporated.

In this section—

• “former name” means a name by which the individual was formerly known for business purposes;

• “name” means the individual’s forename and surname.

Where a director (or proposed director) is a peer or an individual usually known by a title, any requirement imposed by this Act to provide the individual’s name because it forms part of the required information may be satisfied by providing that title instead of the individual’s forename and surname.

Regulations under this section are subject to affirmative resolution procedure.

The Secretary of State may by regulations amend this section so as to change the required information about a director (or proposed director) of a description mentioned in subsection (1).

Regulations under this section are subject to affirmative resolution procedure.

For this purpose a shadow director is treated as an officer of the company.

An individual must not act as a director of a company unless the individual’s identity is verified (see section 1110A).

A company must ensure that an individual does not act as a director unless the individual’s identity is verified (see section 1110A).

A person who contravenes subsection (1) commits an offence.

The only consequences of contravening subsections (1) and (2) are the offences provided for by this section (so that, for example, a contravention does not in any way affect the validity of an individual’s acts as a director).

The person may not act as a director of the company until notice is given under section 167G.

A person who contravenes subsection (2) commits an offence.

Where the offence is committed by a firm, every officer of the firm who is in default also commits the offence.

It is a defence for a person charged with an offence under this section to prove that they reasonably believed that notice had been given under section 167G.

The only consequence of a contravention of subsection (2) is the offence provided for by this section (so that, for example, a contravention does not in any way affect the validity of a person’s acts as a director).

A company may by ordinary resolution at a meeting remove a director before the expiration of his period of office, notwithstanding anything in any agreement between it and him.

Special notice is required of a resolution to remove a director under this section or to appoint somebody instead of a director so removed at the meeting at which he is removed.

A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

A person appointed director in place of a person removed under this section is treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed a director.

On receipt of notice of an intended resolution to remove a director under section 168, the company must forthwith send a copy of the notice to the director concerned.

The director (whether or not a member of the company) is entitled to be heard on the resolution at the meeting.

If a copy of the representations is not sent as required by subsection (3) because received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.

Copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused.

The court may order the company's costs (in Scotland, expenses) on an application under subsection (5) to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.

A person who has been appointed as a director of a company ceases to hold office by virtue of that appointment if the person becomes disqualified under the directors disqualification legislation (see section 159A(2)).

In relation to a person appointed as a director of a company before the time when this section comes into force, the reference in subsection (1) to a person who becomes disqualified includes a reference to a person who, at that time, is already disqualified.

The general duties specified in sections 171 to 177 are owed by a director of a company to the company.

The general duties are based on certain common law rules and equitable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director.

The general duties shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties.

The general duties apply to a shadow director of a company where and to the extent that they are capable of so applying.

Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes.

The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company.

A director of a company must exercise independent judgment.

A director of a company must exercise reasonable care, skill and diligence.

A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).

This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company.

Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.

A “third party” means a person other than the company, an associated body corporate or a person acting on behalf of the company or an associated body corporate.

Benefits received by a director from a person by whom his services (as a director or otherwise) are provided to the company are not regarded as conferred by a third party.

This duty is not infringed if the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.

If a director of a company is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, he must declare the nature and extent of that interest to the other directors.

If a declaration of interest under this section proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.

Any declaration required by this section must be made before the company enters into the transaction or arrangement.

This section does not require a declaration of an interest of which the director is not aware or where the director is not aware of the transaction or arrangement in question.

For this purpose a director is treated as being aware of matters of which he ought reasonably to be aware.

The consequences of breach (or threatened breach) of sections 171 to 177 are the same as would apply if the corresponding common law rule or equitable principle applied.

The duties in those sections (with the exception of section 174 (duty to exercise reasonable care, skill and diligence)) are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors.

Compliance with the general duties does not remove the need for approval under any applicable provision of Chapter 4 (transactions requiring approval of members)F32or 4A.

Otherwise, the general duties have effect (except as otherwise provided or the context otherwise requires) notwithstanding any enactment or rule of law.

In their application to a company that is a charity, the provisions of this Chapter have effect subject to this section.

Section 180(2)(b) (which disapplies certain duties under this Chapter in relation to cases excepted from requirement to obtain approval by members under Chapter 4) applies only if or to the extent that the company's articles allow those duties to be so disapplied, which they may do only in relation to descriptions of transaction or arrangement specified in the company's articles.

F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

This section does not extend to Scotland.

If more than six months before the end of the guaranteed term of a director's employment the company enters into a further service contract (otherwise than in pursuance of a right conferred, by or under the original contract, on the other party to it), this section applies as if there were added to the guaranteed term of the new contract the unexpired period of the guaranteed term of the original contract.

In this section “employment” means any employment under a director's service contract.

If the director or connected person is a director of the company's holding company or a person connected with such a director, the arrangement must also have been approved by a resolution of the members of the holding company or be conditional on such approval being obtained.

A company shall not be subject to any liability by reason of a failure to obtain approval required by this section.

This section explains what is meant in section 190 (requirement of approval for substantial property transactions) by a “substantial” non-cash asset.

A company's “statutory accounts” means its annual accounts prepared in accordance with Part 15, and its “most recent” statutory accounts means those in relation to which the time for sending them out to members (see section 424) is most recent.

Whether an asset is a substantial asset shall be determined as at the time the arrangement is entered into.

Approval is not required under section 190 (requirement of members' approval for substantial property transactions) for a transaction on a recognised investment exchange effected by a director, or a person connected with him, through the agency of a person who in relation to the transaction acts as an independent broker.

This section applies where a company enters into an arrangement in contravention of section 190 (requirement of members' approval for substantial property transactions).

Subsections (3) and (4) are subject to the following two subsections.

In the case of an arrangement entered into by a company in contravention of section 190 with a person connected with a director of the company or of its holding company, that director is not liable by virtue of subsection (4)(c) if he shows that he took all reasonable steps to secure the company's compliance with that section.

Nothing in this section shall be read as excluding the operation of any other enactment or rule of law by virtue of which the arrangement or transaction may be called in question or any liability to the company may arise.

If the director is a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.

If the director is a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.

Any reference to the person to whom a quasi-loan is made is a reference to the borrower.

The liabilities of the borrower under a quasi-loan include the liabilities of any person who has agreed to reimburse the creditor on behalf of the borrower.

If the connected person is a person connected with a director of the company's holding company, the transaction must also have been approved by a resolution of the members of the holding company.

If the director or connected person is a director of its holding company or a person connected with such a director, the transaction must also have been approved by a resolution of the members of the holding company.

Any reference to the person for whose benefit a credit transaction is entered into is to the person to whom goods, land or services are supplied, sold, leased, hired or otherwise disposed of under the transaction.

In this section—

• “conditional sale agreement” has the same meaning as in the Consumer Credit Act 1974 (c. 39); and

• “services” means anything other than goods or land.

If the director or connected person for whom the transaction is entered into is a director of its holding company or a person connected with such a director, the arrangement must also have been approved by a resolution of the members of the holding company.

In determining for the purposes of this section whether a transaction is one that would have required approval under section 197, 198, 200 or 201 if it had been entered into by the company, the transaction shall be treated as having been entered into on the date of the arrangement.

The reference in subsection (1)(a)(ii) to an application for relief is to an application for relief under—

• section 661(3) or (4) (power of court to grant relief in case of acquisition of shares by innocent nominee), or

• section 1157 (general power of court to grant relief in case of honest and reasonable conduct).

A “money-lending company” means a company whose ordinary business includes the making of loans or quasi-loans, or the giving of guarantees or provision of security in connection with loans or quasi-loans.

This section has effect for determining what are “other relevant transactions or arrangements” for the purposes of any exception to section 197, 198, 200 or 201.

In the following provisions “the relevant exception” means the exception for the purposes of which that falls to be determined.

Other relevant transactions or arrangements are those previously entered into, or entered into at the same time as the transaction or arrangement in question in relation to which the following conditions are met.

The value of a loan is the amount of its principal.

The value of a quasi-loan is the amount, or maximum amount, that the person to whom the quasi-loan is made is liable to reimburse the creditor.

The value of a credit transaction is the price that it is reasonable to expect could be obtained for the goods, services or land to which the transaction relates if they had been supplied (at the time the transaction is entered into) in the ordinary course of business and on the same terms (apart from price) as they have been supplied, or are to be supplied, under the transaction in question.

The value of a guarantee or security is the amount guaranteed or secured.

The value of an arrangement to which section 203 (related arrangements) applies is the value of the transaction to which the arrangement relates.

This section applies where a company enters into a transaction or arrangement in contravention of section 197, 198, 200, 201 or 203 (requirement of members' approval for loans etc).

Subsections (3) and (4) are subject to the following two subsections.

In the case of a transaction or arrangement entered into by a company in contravention of section 200, 201 or 203 with a person connected with a director of the company or of its holding company, that director is not liable by virtue of subsection (4)(c) if he shows that he took all reasonable steps to secure the company's compliance with the section concerned.

Nothing in this section shall be read as excluding the operation of any other enactment or rule of law by virtue of which the transaction or arrangement may be called in question or any liability to the company may arise.

The references to compensation and consideration include benefits otherwise than in cash and references in this Chapter to payment have a corresponding meaning.

References in those sections to payment by a person include payment by another person at the direction of, or on behalf of, the person referred to.

Nothing in this section or sections 216 to 222 applies in relation to a payment for loss of office to a director of a quoted company F24or unquoted traded company other than a payment to which section 226C does not apply by virtue of section 226D(6).

“Unquoted traded company” means a traded company (as defined by section 360C) that is not a quoted company.

A company may not make a payment for loss of office to a director of the company unless the payment has been approved by a resolution of the members of the company.

A company may not make a payment for loss of office to a director of its holding company unless the payment has been approved by a resolution of the members of each of those companies.

No payment for loss of office may be made by any person to a director of a company in connection with the transfer of the whole or any part of the undertaking or property of the company unless the payment has been approved by a resolution of the members of the company.

No payment for loss of office may be made by any person to a director of a company in connection with the transfer of the whole or any part of the undertaking or property of a subsidiary of the company unless the payment has been approved by a resolution of the members of each of the companies.

No payment for loss of office may be made by any person to a director of a company in connection with a transfer of shares in the company, or in a subsidiary of the company, resulting from a takeover bid unless the payment has been approved by a resolution of the relevant shareholders.

The relevant shareholders are the holders of the shares to which the bid relates and any holders of shares of the same class as any of those shares.

If at a meeting to consider the resolution a quorum is not present, and after the meeting has been adjourned to a later date a quorum is again not present, the payment is (for the purposes of this section) deemed to have been approved.

In relation to a payment within section 217 (payment by company) an existing legal obligation means an obligation of the company, or any body corporate associated with it, that was not entered into in connection with, or in consequence of, the event giving rise to the payment for loss of office.

In relation to a payment within section 218 or 219 (payment in connection with transfer of undertaking, property or shares) an existing legal obligation means an obligation of the person making the payment that was not entered into for the purposes of, in connection with or in consequence of, the transfer in question.

In the case of a payment within both section 217 and section 218, or within both section 217 and section 219, subsection (2) above applies and not subsection (3).

A payment part of which falls within subsection (1) above and part of which does not is treated as if the parts were separate payments.

For this purpose “other relevant payments” are payments for loss of office in relation to which the following conditions are met.

If a payment is made in contravention of section 218 (payment in connection with transfer of undertaking etc), it is held by the recipient on trust for the company whose undertaking or property is or is proposed to be transferred.

If a payment is in contravention of section 217 and section 218, subsection (2) of this section applies rather than subsection (1).

If a payment is in contravention of section 217 and section 219, subsection (3) of this section applies rather than subsection (1), unless the court directs otherwise.

Any reference in those provisions to loss of office as a director does not apply in relation to loss of a person's status as a shadow director.

Subsection (1) has effect subject to any provision of the company's articles.

Approval may be required under more than one provision of this Chapter.

If so, the requirements of each applicable provision must be met.

This does not require a separate resolution for the purposes of each provision.

In this Chapter—

• “directors' remuneration policy” means the policy of a quoted companyF38, or of an unquoted traded company, with respect to the making of remuneration payments and payments for loss of office;

• “ quoted company ” has the same meaning as in Part 15 of this Act;

• “ remuneration payment ” means any form of payment or other benefit made to or otherwise conferred on a person as consideration for the person—

  1. a

     holding, agreeing to hold or having held office as director of a company, or

  2. b

     holding, agreeing to hold or having held, during a period when the person is or was such a director—

     1. i

        any other office or employment in connection with the management of the affairs of the company, or

     2. ii

        any office (as director or otherwise) or employment in connection with the management of the affairs of any subsidiary undertaking of the company,

  other than a payment for loss of office;

• “ payment for loss of office ” has the same meaning as in Chapter 4 of this Part.

• F35“unquoted traded company” means a traded company (as defined by section 360C) that is not a quoted company.

References in this Chapter to the making of a remuneration payment or to the making of a payment for loss of office are to be read in accordance with this section.