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What's the issue?
After 30 September 2010, all companies must have at least one individual as a director.
As a result, if your company only has corporate director(s), you must ensure that at least one "natural person" is appointed as a director by the deadline. It is not sufficient to have a "natural person" acting as a company secretary, but with only corporate director(s).
If a company fails to comply with this requirement, it will be in breach of section 155 of the Companies Act 2006. The penalties for breach include fines of up to £5,000 for both the company and also any officer in default (and then, for continued contravention, daily default fines).
Jordans, the incorporation agents, have identified that there are a significant number of companies currently at risk – 24,242 on 8 September 2010 – and have created a website enabling you to check whether or not your company is one of them.
What should you be doing now?
- Check whether your company currently has no individual on its board of directors.
- If there is no individual director, you must appoint an individual to the board by no later than 30 September 2010 (and decide whether you will keep the corporate director(s) in place).
- You will need to check that the appointment of the individual does not exceed the maximum number of directors allowed by the company's articles of association.
- If you replace a corporate director with an individual, you should check that your company's articles of association deal appropriately with individual directors (e.g. by allowing the prompt appointment of a replacement director if the individual dies or resigns suddenly).
If you need any more information or help in appointing another director, please contact Caroline Copeland.
Caroline Copeland
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Simkins' early warning bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.
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