Guide to Limited Company Officers

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Having established a limited company in the UK you will need to agree on a corporate structure and, specifically, who will perform the roles of your company officers. In this guide we explain what is meant by a limited company officer, how many are required, who can perform these roles and the duties of company officers.

Limited company officers

What is a limited company officer?

The role of a company officer is defined by section 1173 of the Companies Act 2006. In relation to a body corporate, a “company officer” can include a director, manager or secretary. Company officers have the authority to represent the company and to make key decisions regarding its operation. Following incorporation, secretaries and directors can be formally appointed by members during the life of the company in accordance with the process defined in the company’s Articles of Association. Company officers must always be in place and their details must be registered with Companies House. Any such changes in company officers must be notified to Companies House as soon as possible.

How many limited company officers are required?

A UK private limited company must have a corporate structure with at least one natural director (i.e. a real person and not a corporate body) appointed at all times during the life of the company. For a PLC, two appointed directors must always be in place. Unless stated in the company’s articles of association, there is no maximum limit on the number of directors (whether human beings or corporate bodies) that may be appointed. There is no legal requirement to appoint a person to the position of company secretary but, as we will explain later in this article, the appointment of a company secretary may confer considerable advantages upon the company chair, board, directors, shareholders and external stakeholders.

Company directors

Limited company directors are ultimately responsible for the day-to-day operation of the company and for ensuring that the company accounts and financial reporting obligations are always met.

What are the duties and responsibilities of a company director?

Under chapter 2 of part 10 of the Companies Act 2006 (CA 2006) company directors have a number of general duties, including:

  • To act within powers –This means that company directors must act in accordance with the company’s constitution and exercise powers only for the purposes for which they are conferred.
  • To promote the success of the company – Section 172 of the CA 2006 makes it clear that a director must act in a way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, which includes weighing up:
    • the potential consequences of any decision in the long term.
    • the interests of the company’s employees.
    • the need to foster the company’s business relationships with suppliers, customers and others.
    • the impact of the company’s operations on the community and the environment.
    • the desirability of the company maintaining a reputation for high standards of business conduct.
    • the need to act fairly as between members of the company.
  • To exercise independent judgment – A director must ultimately make his or her own decisions and should not feel compelled to follow the instructions of another person, whether another director, a company secretary or anyone from outside.
  • To exercise reasonable care, skill and diligence – In accordance with section 174 of the CA 2006 directors are expected always to exercise care, skill and diligence with both:
    • The general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions of a director in relation to the company (this is referred to as the “objective test”).
    • The general knowledge, skill and experience that the director actually has (this is referred to as the “subjective test”).
    This means that a director must display the knowledge, skill and experience set out in the objective test but, where they have particular specialist knowledge, skill or experience, the higher subjective standard must be met.
  • To avoid conflicts of interest – In accordance with section 175 of the CA 2006, a director must avoid situations in which he or she has or could have a direct or indirect interest that conflicts with, or could conflict with, the company’s interests.
  • Not to accept benefits from third parties – For example, a director cannot accept a bribe in return for awarding a contract.
  • To declare any interest in a proposed transaction or arrangement with the company – This means that where a director directly or indirectly has an interest in a company transaction or arrangement, the extent and nature of this interest must be formally declared to the other directors.
    Beyond these general duties, company directors also have a range of other responsibilities including filing accounts and reports with the registrar and adhering to laws such as those relating to workplace health and safety. Directors also need to ensure that any rules defined in the company’s articles of association are followed, that corporation tax is paid and that the register of People with Significant Control (PSC) is kept up to date.

Failure to meet any of these duties or obligations means that a company director may be considered personally responsible and may lead to action being taken against them, which may include fines, prosecution and disqualification.

Company secretaries

What does a company secretary do?

A limited company secretary plays a central role in both the governance and administration of a company, often acting in an advisory capacity to the company board, including the chair and the non-executive directors. The CA 2006 does not define the role of a company secretary since this will largely depend on the nature and size of the company.

What are the responsibilities of a company secretary?

Company secretaries have the following responsibilities to the company, its chair, its board and its shareholders:

Responsibility to the company chair

In most cases, the company secretary will report to the company chair and provide important guidance on fulfilling the role of chair in a manner that meets their duties and responsibilities. It is also common practice for both the chair and company secretary to undertake a periodic review of the company’s governance model to ensure that it remains fit for purpose.

Responsibility to the company board

The responsibility and importance of the company secretary to the board cannot be overstated. The secretary is pivotal in helping to ensure that the following are considered by the board:

  • directors’ statutory duties.
  • disclosure obligations.
  • listing rule requirements.
  • corporate governance requirements and practices.
  • effective board processes.
  • decisions are made that lead to a healthy company and a moral corporate ethic.

Responsibility to the company and shareholders

Company secretaries play a key role in steering the strategic direction of the business in a manner that adds and preserves value for the shareholders. They make sure also that the business objectives of the company are met in a considered manner and communicated effectively to external stakeholders.

Does a limited company always need a company secretary?

No, it does not. Section 270 of the CA 2006 states that a private company is not required to have a secretary within its corporate structure. Where a company does not have a company secretary, the CA 2006 goes on to explain that:

  • anything authorised or required to be given or sent to, or served upon, the company by being sent to its secretary:
    • may be given or sent to, or served upon, the company itself, and
    • if addressed to the secretary shall be treated as addressed to the company.
  • anything else required or authorised to be done by or to the secretary of the company may be done by or to:
    • a director, or
    • a person authorised generally or specifically by the directors.

It is important to note that, under section 271 of the CA 2006, public companies must have a company secretary.

What qualifications are required by a company secretary?

Private company secretaries are not required by law to hold any particular qualification. Under section 173 of the CA 2006, however, secretaries of public companies do need certain qualifications which may include:

  • having acted in the role of secretary of a public company for at least three of the five years immediately preceding the appointment as secretary;
  • being a member of any of the following bodies:
    • the Institute of Chartered Accountants in England and Wales;
    • the Institute of Chartered Accountants of Scotland;
    • the Association of Chartered Certified Accountants;
    • the Institute of Chartered Accountants in Ireland;
    • the Institute of Chartered Secretaries and Administrators;
    • the Chartered Institute of Management Accountants;
    • the Chartered Institute of Public Finance and Accountancy.
  • being a barrister, advocate or solicitor
  • being a person who, by virtue of holding or having held any other position or of being a member of any other body, appears to the directors to be capable of discharging the functions of secretary of the company.

Given the nature of the role of a company secretary, it is advisable to seek candidates with the following attributes:

  • a clear understanding of the role and the roles of those to whom they have responsibilities.
  • strong organisational skills.
  • strong written and verbal communication skills.
  • high levels of moral integrity.
  • ability to work with people and stakeholders at all levels within the company and externally.
  • a strong understanding of the company’s business strategy.
  • expertise and interest in corporate governance and law.
  • attention to detail.

Final words

Company officers, both in the role of director and secretary, play a vital role in all aspects of a limited company, including (but not limited to) its day-to-day operations, guiding corporate strategy and ensuring compliance with statutory duties. By understanding the legal requirements of company officers, and their role, scope, and powers, you can create an effective corporate structure that can steer your limited company towards a successful future while ensuring compliance and protecting the interests of shareholders, stakeholders and directors at all times.

Uniwide Formations specialises in the registration of limited companies and LLPs. As professional business service providers, we offer a wide range of related services and can advise you on all aspects of company formation and filing.

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