A Guide to Appointing a Corporate Director in a Limited Company

Corporate directors just like human directors are important entities within a limited company. The process of appointing a corporate body as a director within a limited company is similar to how an individual is appointed, however, there are still some variations.

In this post, you will know what a corporate director is, how they are appointed, their roles and responsibilities within a company, and many more.

What is a Corporate Director?

A corporate director refers to a business or corporate entity, an organization or institution that is appointed as a director in a limited company. Unlike the natural director who is a human or a person, a corporate director is an organization, firm, or company that serves as a director in another company.

A limited company can have as many corporate directors as possible so far as it meets up with the one natural director requirement, meaning that before a company can appoint a corporate director, it must have at least one natural director.

There are several benefits attached to appointing a corporate director. Many companies, especially new startups, appoint a corporate director because of the expertise, guidance, resources, and support that they could receive from successful and well-established companies. As a new limited company, having a corporate director could help your company grow and develop as fast as possible. Moreover, it helps build trust and credibility with suppliers, creditors, customers, and the public in general.

Corporate directors in a limited company carry out the same role just as the natural director. However, a corporate director must select an authorized individual who would act on behalf of the corporate director within the limited company. This role most times is being appointed to a director or secretary of the corporate company or firm.

Importantly, limited companies within the UK must note that there was a proposal to ban the use of corporate directors by the Small Business Enterprise, and Employment Act 2015. However, there hadn’t been an agreement on the implementation of the ban. As a result, limited companies in the UK can still appoint a corporate director. But must also continually monitor the ban to be sure they aren’t operating unlawfully.

Criteria for Appointing a Corporate Director

Appointing a corporate director in the UK is quite easy. However, certain conditions must be met.

1. Availability of a human director

For your limited company to appoint a corporate director, it must have at least one human or natural director. If you attempt to register your company through the form IN01 without providing at least one human director, such an application will be rejected by the Companies House. If you make your application online through the Companies House website, without providing the human director, you won’t be able to submit your application.

2. Submission of necessary information

When a company appoints a corporate director, it must provide all the necessary information to the Companies House. Information including the registered name of the corporate body, place of registration, registered address, number of directors in the corporate body, and so on must be provided.

3. Registration with Companies House.

For a company to appoint a corporate director, it must ensure that the corporate director itself is a registered company. Thus a company that has not gone through the appropriate registration and paperwork cannot be a corporate director. Apart from that the corporate director must be willing to be subjected to some regulations by providing director details in the Companies House register.

4. The Articles of Association

Similarly, for a company to appoint a corporate body as a director in the UK, there must be provisions for this in the company’s articles of association. Therefore there must not be any prohibition against the appointment of a corporate director in the articles of association for the appointment to take place.

5. Commitment and accountability

For a corporate director to be appointed, there must be an agreement on the nature of the duties, obligations, and commitment. They should thus be ready to be treated just like the human director and must be ready to be held responsible or accountable for what they do within the company. The liabilities, obligations, rules of operations and so on that apply to a human director must be applied to a corporate director.

6. Insolvency

It should be noted by the limited company and the corporate director itself that, if at any point the corporate director (i.e. the corporate organization or a firm) goes into insolvency or dissolution, the appointment of being a corporate director automatically terminates.

7. No Former Disqualifications

For a company or firm to be qualified for being appointed as a corporate director, there must be no previous ban or disqualification of being a corporate director of the company.

How to Appoint a Corporate Director

The process of appointing a corporate director is quite similar to how you appoint a natural director. However, the steps to follow when appointing a corporate director depend on the period or when the appointment takes place. A corporate director can be appointed during or after a company's formation and this influences how the appointment will be done.

If the corporate director is appointed during the company's formation, then you must provide the director's details when filling out the form IN01: Application to register a company. Information like the corporate director's name, registration number, place of registration, appointment date, and many more will be provided when filing the form.

In situations when the appointment is made after the company's registration, then the company must follow some steps before notifying Companies House. These steps include:

• An individual from the corporate director or company attesting or signing to the fact that their company agrees to be a director in the other company.
• Passing an ordinary resolution within the limited company before making the appointment. As such, the majority of the shareholders must agree that the corporate director should be appointed before the appointment can be made.

Once the agreement to have a corporate director has been achieved, the limited company must notify Companies House within 14 days in which the appointment was made. The limited company thus will be required to file the form AP02: Appointment of a corporate director form.

What Information Do I Need to Provide About Corporate Directors to Companies House?

Whether a limited company makes the appointment of a corporate director during or after the company's incorporation, it must provide the following information about the corporate director to Companies House.

1. Corporate director authorizer details

Once a corporate director has been appointed, it must make provisions for the authorizing director who will represent the corporate body at all times. As such the corporate company must provide the name and details of the authorized individual to be made available for the Companies House. Although the authorized individual can be anyone within the corporate director company, most companies use the director or secretary. While this authorized person's details will be provided to be registered with the Companies House, this doesn’t give the individual any extra responsibilities apart from the ones agreed with the corporate director.

2. Registered name of corporate director

The registered name of the corporate director which is the corporate company registered name must also be provided.

3. Registration number

This is the unique reference number or code given to the company after formation or registration. This should also be provided.

4. Registered office address

All registered limited companies must have a physical registered office address. This is usually an official address that can be accessed in a physical location. This address usually is where documents and notices can be delivered when needed. A corporate director thus must have and provide this.

5. Country and place of registration

The country and place where the corporate body registration was made will also be needed as this will determine the legal forms of the corporate director.

6. Date of appointment

In situations when the appointment of the corporate director was made after the company’s formation, you will need to provide the Companies House with the date on which the appointment was made. Note that this date should be when the actual appointment was made and not the date when the Companies House was notified.

7. Governing Law

If the corporate director is appointed from a country other than the UK, then the law to which the corporate director company abides must be provided.

8. Legal forms

This is the company structure of the corporate body appointed. If the corporate director is a US-based company and it’s a Limited Liability Company (LLC), then its legal form is also LLC.

Are Corporate Director Details Available on the Public Record?

Just like every natural director's details are available on the Companies House register for the public to access, the corporate director's details are also accessible to the public. However, there could be some slight differences in the information available about both types of directors.

Corporate Directors

• Appointment date
• Registered name of the corporate body and the number of directors
• Registered office address
• Place of registration of the corporate body
• Place of incorporation and registration number
• Legal forms

Natural or human Directors

• Full name of the directors
• Nationality
• Date of birth
• Appointment date
• Service Address

Roles and Responsibilities of a Corporate Director

The roles and responsibilities of a corporate director are quite similar to that of a natural or human director. Here are some of the roles and responsibilities.

1. Promoting success

Most corporate bodies who act as directors within a company are usually ones that have existed before the business making the appointments. So as a corporate director, you have to provide the guidance and support needed for the other company to succeed. As such all decisions and steps taken within the organization should be in the best interest of the company.

Apart from that corporate directors must strive towards maintaining and improving the reputation and credibility of the company in which they are appointed. They should work towards connecting the company to suppliers, creditors, customers, etc. that will bring about a positive change to the company.

2. Acting within their powers

Corporate directors must adhere to exercise their powers following the guidelines contained in the articles of association. The Articles of Association is a document that contains the set rules and regulations that dictate how a company Is being operated, the rights and powers of directors and shareholders, and how decisions should be made.

Apart from that, corporate directors must be aware of the company agreement and understand its details. A company agreement most times is designed by the company and it explains the roles, duties, and powers granted to directors of a company. As such a corporate director must understand the company articles of association and company agreement to ensure that they act within the power granted by the members or shareholders.

3. Giving independent judgment

Corporate directors should work in hand with the natural directors to make judgments and decisions within the company. Although they may receive advice from other professionals, they must be aware of their rights to make certain decisions and must maintain impartiality and avoid bias when making those decisions.

4. Complying with regulations and rules

A corporate director must be aware of the rules and regulations guiding the company in which they operate. Apart from following the rules from the Companies House, they should familiarize themselves with laws like health and safety laws, licensing laws, intellectual property, environmental regulations, and many more.

If the business nature of the corporate director is different from the company in which they are appointed, then it is the responsibility of the corporate director to learn the laws guiding the company’s operations.

5. Reporting and providing adequate filings

Just like the natural directors, corporate directors are also expected to provide the necessary filings and reporting with the Companies House when needed. Some of the filings and reporting include, filing annual accounts, registration for tax returns, filing annual confirmation statements, reporting changes made to the company’s details, and registering for VAT and PAYE.

Although some companies appoint secretaries to carry out some of these tasks. However, these tasks are still the legal responsibilities of the corporate and human directors and they’ll be therefore held responsible if there’s a breach of assigned duties.

Conclusion

Corporate directors within a limited company are important because of the benefits they offer. The first-hand resources and support provided by a corporate director to startup companies serve as a guide that they leverage to boost the development of the company as soon as possible. Do you have any questions about appointing a corporate director in a limited company? Kindly contact one of our experts here.