Find out more about Criminal Records and Being a Company Director
Directors are the people who are in charge of managing a company, according to the law. However, in many companies, especially smaller ones, shareholders and directors can be one and the same. Put simply, shareholders own the company and are considered separate legal entities whilst directors make the day-to-day decisions on how the company should be run. They do this on behalf of the shareholders and report back to them as and when required. Directors are responsible for making sure the business is compliant with company law if they fail to do this, they can be found personally liable for the firm’s losses.
The minimum legal requirement for a private limited company is to have one director and two for a public limited company. The law also states that each one of the directors is a “natural person” or in other words a person and not another company.
What Makes a Good Director?
Directors can authorise transactions and enter into contracts on behalf of the company. Therefore, they must be honest and trustworthy as they are ultimately responsible for the actions of the company and will be liable for any offences that they cause the company to commit.
The way in which directors are chosen and appointed can vary from company to company. However, the procedure is outlined in the company’s constitution or Articles of Association. Companies House keeps a record of each company and when a new director is appointed, it should be notified using the Appoint a Director (AP01) form.
Let’s consider some of the most important skills to be a director:
- knows when to delegate
- recruits effectively
- understands risks
- understands the business sector
- good business acumen
- sees the bigger picture
- customer focus
- motivates and inspires staff
- demonstrates confidence as a spokesperson for the company
- leads by example
Having a Criminal Record
Under The Company Directors Disqualification Act 1986 a director is classed as either “fit” or “unfit” to act as a director of a company. The definition of a “fit” director doesn’t exist, that said, there is a list of factors defining “unfitness”. Individuals who are not regarded “unfit” under these pointers are by definition “fit” to act again as a director in future companies.
Having a criminal record shouldn’t prevent individuals from becoming a director of a company. The AP01 form that needs to be filed at Companies House makes no reference to criminal convictions. However, there may be certain factors that prevent individuals from becoming directors, for instance, if they are on The Disqualified Directors Register because they’ve been banned by the Courts from being a director or have been bankrupt.
The directors of a company make up the Board, and other persons may be invited to attend board meetings to achieve a good balance. A Board should always contain individuals with extensive hands-on business experience who can look at the company’s problems and goals with a strategic eye. It’s also wise to have directors who have a list of contacts and the sector-specific knowledge specific. Importantly, the Board should look credible to outsiders. In this way, the company will be taken more seriously by potential investors, future management candidates as well as business partners.
Previously disqualified directors and are not allowed to hold the position again unless a Court grants them permission. In a public limited company, directors over the age of 70 must have their appointment approved at a company general meeting. Finally, all directors must be at least 16 years old
If you would like to know more about your duties and responsibilities as a company director or are unsure whether you are legally allowed to carry out the role of director or to sit on a Board, please call 08000 746 757 or email email@example.com for free and confidential advice from one of our professional advisers.