Appointing, resigning and removing directors properly

Who Can Be a Director?

Every private limited company in the UK must have at least one director, who must be a 'natural person' (i.e., a human being). While other companies can be directors (a 'corporate director'), at least one director must be an individual. The directors are responsible for the day-to-day management of the company, and they owe a set of legal duties to it. The power to appoint directors is typically defined in the company's articles of association. For companies using the standard 'Model Articles', the power to appoint can be exercised by either the existing directors (via a board resolution) or the shareholders (via an ordinary resolution). It's crucial to check your articles first, as they may contain specific provisions, such as a shareholder's right to appoint a director.

The primary legal requirement for an individual to become a director is that they must be at least 16 years old at the time of their appointment. There is no upper age limit. They do not need to be a UK resident or a British citizen, nor do they need to be a shareholder in the company, although they often are. The prospective director must consent to their appointment; you cannot appoint someone without their knowledge and agreement. Before proceeding with an appointment, you must also ensure the individual is not legally disqualified from acting as a director. Appointing a person you know to be disqualified is a serious offence for both the appointer and the appointee, potentially leading to fines or even imprisonment.

Disqualification prevents an individual from being involved in the promotion, formation, or management of a company without specific permission from a court. The most common reason for disqualification is a formal order from a court or the Insolvency Service, often following the investigation of an insolvent company where the director's conduct was found to be unfit. Another common reason is if the person is an undischarged bankrupt, meaning they are still going through the legal process of bankruptcy and have not been released from its restrictions. It is the company's responsibility to conduct due diligence and ensure any proposed director is eligible to act. Companies House maintains a public register of disqualified directors which can be checked online.

• They are under 16 years of age.
• They are an undischarged bankrupt (unless given court permission).
• They are subject to a director disqualification order or undertaking.
• The company's articles of association specifically forbid their appointment.
• They are the company's auditor.

Worth knowing: Before appointing anyone, verify they are at least 16, have consented to act, and are not legally disqualified from being a director.

The Process of Appointing a New Director

Appointing a new director requires a formal, documented process to be legally valid. The first step is to consult your company's articles of association. These are the rules that govern how the company is run. If your company uses the standard Model Articles, new directors can be appointed by a decision of the existing directors (a board resolution) or by the company’s shareholders (an ordinary resolution, which requires a simple majority of votes). If your company has bespoke articles or a shareholders' agreement, there may be different or additional requirements, such as granting a specific shareholder the right to appoint a director or requiring a higher percentage of votes. Ignoring these rules can invalidate the appointment, so this initial check is essential before you proceed with any further action.

Once you have confirmed the correct procedure, you must pass the necessary resolution. For a board resolution, this involves calling a board meeting, presenting the motion to appoint the new director, and having the majority of directors vote in favour. The decision must be recorded in the minutes of the meeting. Alternatively, if shareholders are making the appointment via an ordinary resolution, this can be done at a general meeting or, more commonly for small companies, via a written resolution circulated to all eligible shareholders. A written resolution is passed once shareholders representing over 50% of the voting rights have signed their agreement. Keeping a clear paper trail of these resolutions is a legal requirement and provides crucial evidence of the decision.

Crucially, a person cannot be appointed as a director without their explicit consent. Before you file any forms with Companies House, you must have confirmation from the individual that they agree to take on the role and its associated legal duties. While this consent can be verbal, it is highly advisable to obtain it in writing, for example via an email or a formal letter of consent. This document should be retained with the company's internal records. This step is not just a formality; it confirms the new director understands and accepts their legal responsibilities from the outset. Once consent is secured and the resolution is passed, you are ready to formally notify Companies House.

1. 1

   Review your company's articles of association and any shareholders' agreement to understand the specific rules for appointing directors.

2. 2

   Obtain the prospective director's personal details and their formal consent to act.

3. 3

   Convene a board meeting or circulate a shareholder resolution to formally approve the appointment.

4. 4

   Record the decision in the minutes of the board meeting or keep a copy of the signed written resolution.

5. 5

   Inform Companies House by filing form AP01 within 14 days of the appointment.

6. 6

   Update the company's internal statutory Register of Directors and Register of Directors' Residential Addresses.

7. 7

   Notify the company's bank, insurer, and HMRC of the change in directorship.

Notifying Companies House of an Appointment

Once a director has been formally appointed by the board or shareholders, you have a legal obligation to inform Companies House. This notification must be made within 14 days of the date of appointment. Failing to meet this deadline is an offence committed by the company and every officer in default, which can result in fines. The official form for this purpose is the AP01 'Appointment of director'. Filing this form is how the new director's details are placed on the public record. It ensures transparency and allows third parties, such as suppliers and lenders, to see who is legally responsible for managing the company. Timely filing is therefore a key part of good corporate governance and legal compliance.

To complete the AP01 form, you will need to provide specific personal information about the new director. This includes their full forename and surname, any former names used for business purposes in the last 20 years, date of birth, nationality, country of residence, and their occupation. You must also provide a service address, which will be displayed on the public record, and their usual residential address, which is kept private by Companies House. Since the Economic Crime and Corporate Transparency Act 2023, new identity verification requirements are being phased in. This means all directors will need to have their identity verified, either directly with Companies House or through an authorised agent. This is a significant change designed to increase the integrity of the register.

Worth knowing: You must file form AP01 with Companies House within 14 days of a director's appointment, providing their personal details and a service address.

Director's Service Address and Privacy

When appointing a director, you must provide two addresses to Companies House: a service address and a residential address. The director's service address is the key address for correspondence from Companies House and other official bodies. Crucially, this address is placed on the public record and is visible to anyone searching the Companies House register online. For this reason, many directors are understandably concerned about using their home address. It is perfectly acceptable and common to use the company's registered office address as the director's service address, provided the director has given their permission and has a reliable method for receiving mail sent there. This is a simple and effective way to protect a director's personal privacy from public view.

Alternatively, directors can use a dedicated service address provider. These services offer a professional business address that can be used for all director correspondence, which is then forwarded to their private address. This service is often offered alongside a registered office address service. The director's usual residential address must also be provided to Companies House. However, this information is protected and is not available on the public register. It is held securely and only disclosed in specific circumstances, such as to credit reference agencies or law enforcement bodies. It is a legal requirement to provide a genuine residential address; using a PO Box or a care-of address is not permitted for the residential address.

Worth knowing: Use the company's registered office or a professional address service as the director's public service address to protect their home address.

Director Resignation: The Proper Procedure

A director has the right to resign from their position at any time. The process is typically straightforward and is initiated by the director themselves. To resign, a director must give notice to the company. This should be done in writing (via letter or email) and sent to the company's registered office address. While there is no statutory notice period for resignation in the Companies Act, the director's service contract or the company's articles of association may specify one. Even if they do, a director can still resign, but breaching a contractual notice period could potentially leave them liable for damages if it causes the company a loss. For most small companies, the resignation is effective as soon as the notice is received by the company.

Once the company receives the notice of resignation, the board of directors should formally acknowledge it, typically at a board meeting. The decision to note and accept the resignation should be recorded in the board minutes. The company then has a legal duty to inform Companies House of the change within 14 days of the effective date of resignation. This is done by filing form TM01 'Termination of appointment of director'. As with appointments, this can be filed online for free or by post. It is the company’s responsibility to file this form, not the departing director's. Prompt filing is important to ensure the public record is accurate and to remove the resigning director's name from association with the company's ongoing activities and liabilities.

A common problem arises when a director resigns but the company fails or refuses to file the TM01 form. This can leave the individual's name on the public register, potentially making them appear liable for company actions taken after their departure. In this situation, the Companies Act 2006 allows the director who has resigned to file the form themselves. To do this, they must complete a paper TM01 form and send it to Companies House along with a copy of their resignation letter or other evidence showing they have formally notified the company. Companies House will then process the form and update the register, ensuring the director's resignation is officially recorded and protecting their position.

• The full name of the company.
• The company's registration number.
• The director's full name as it appears on the register.
• A clear statement of their intention to resign.
• The effective date of the resignation.

Worth knowing: A director resigns by giving written notice to the company, which must then file form TM01 with Companies House within 14 days.

Removing a Director Against Their Will

While resignations are common, sometimes shareholders may need to remove a director who is unwilling to leave. The Companies Act 2006 provides a statutory procedure for this under section 168. This section gives shareholders the power to remove a director by passing an ordinary resolution, which requires a simple majority (more than 50%) of the votes cast at a general meeting. This is a powerful right that cannot be removed or restricted by the company's articles of association or any agreement between the company and the director (such as a service contract). However, while the right to remove a director is absolute, a director removed in breach of their service contract may be able to claim compensation for wrongful dismissal, so legal advice is often prudent.

The process for removal is highly prescriptive and must be followed precisely. It requires 'special notice'. This means that the shareholder(s) wishing to propose the resolution to remove a director must give the company notice of their intention at least 28 clear days before the general meeting where the vote will take place. The company must then give the other shareholders at least 14 clear days' notice of the meeting and the proposed resolution. Crucially, the company must also send a copy of the notice to the director concerned immediately. The director has the right to make written representations and have them circulated to shareholders before the meeting, and also has the right to speak at the meeting itself. This ensures the director has a fair opportunity to state their case before shareholders vote.

Worth knowing: Removing a director requires an ordinary resolution from shareholders with at least 28 days' special notice, following the strict procedure in the Companies Act.

Practical Consequences of a Director Change

Changing a director involves more than just passing a resolution and filing a form with Companies House. There are several critical administrative tasks that must be handled promptly to ensure business continuity and correct legal standing. One of the most urgent is updating the company's bank mandate. Banks require specific authorisation for individuals to access accounts, sign cheques, or approve payments. When a director leaves, their authority must be revoked immediately. When a new director joins, they must be formally added to the mandate. This usually requires the completion of specific bank forms and may involve all signatories visiting a branch with identification. Delaying this step can lead to operational paralysis if payments cannot be made or, worse, unauthorised access to company funds by a departed director.

Beyond the bank, you must notify several other key parties. HMRC needs to be informed, particularly if the director was on the payroll, to ensure PAYE records are correct. The company's insurers should also be notified, as the composition of the board can be a material fact for policies like directors' and officers' (D&O) liability insurance. Key suppliers, landlords, and significant customers may also need to be informed, depending on the director's role and existing relationships. Internally, all company letterheads, websites, and other trading disclosures that list directors' names must be updated to reflect the change. This is a legal requirement under the Companies (Trading Disclosures) Regulations 2008. A systematic approach ensures no stakeholder is missed.

Worth knowing: After a director change, immediately update the bank mandate and statutory registers, then notify Companies House, HMRC, and other key stakeholders.

PAYE & National Insurance Implications for Directors

When a director also receives a salary from the company, they are treated as an employee for tax purposes. This means the company must register as an employer with HMRC and operate the Pay As You Earn (PAYE) system. Under PAYE, the company is responsible for calculating and deducting Income Tax and employee's National Insurance Contributions (NICs) from the director's salary each payday. These deductions, along with the company's own employer's NICs, must be paid over to HMRC. The rules for calculating NICs for directors can be different from regular employees; often, they are calculated on an annual basis, even if the director is paid monthly, which can smooth out payments over the year. Keeping accurate payroll records is a legal requirement and essential for filing correct reports with HMRC.

The company is also liable for employer's Class 1 National Insurance contributions on a director's salary. Based on projected rates for the 2025/26 tax year, this liability is 15% on all earnings paid above the annual Secondary Threshold of £5,000. This is a direct cost to the business on top of the gross salary paid. However, many small businesses can mitigate this cost by claiming the Employment Allowance. For 2025/26, this is projected to be £10,500. This allowance can be used to reduce the company's annual employer's NICs bill. It's important to note that the Employment Allowance is not available to companies where the only person on the payroll is a single director, which is a common scenario in many personal service companies.

Worth knowing: If a director is paid a salary, the company must run a PAYE payroll, paying employer's NICs and deducting tax, but may be able to claim the Employment Allowance.

Updating Company Statutory Registers

While notifying Companies House of a director change is a critical public-facing task, it is equally important to update your company's own internal statutory registers. The Companies Act 2006 requires every company to maintain a set of legal records detailing its ownership and management structure. These registers are the company's primary source of legal truth and must be kept meticulously. When a director is appointed, resigns, or is removed, the changes must be entered into the relevant registers immediately. This is not optional; it is a legal duty. Failure to maintain these registers correctly is an offence and can cause significant legal and administrative problems later, particularly during a company sale, audit, or investment round.

The key registers to update are the 'Register of Directors' and the 'Register of Directors' Residential Addresses'. The Register of Directors must record the director's name, service address, nationality, occupation, and date of birth. When an appointment is made, a new entry is created. When one ceases, the date of termination is recorded against their entry. The Register of Directors' Residential Addresses contains sensitive home address information and must be kept separately and securely. These registers must be available for inspection at the company's registered office or a nominated Single Alternative Inspection Location (SAIL). Keeping these records accurate and up-to-date demonstrates good corporate governance and ensures you are compliant with the law.

• Register of Members (Shareholders)
• Register of Directors
• Register of Directors' Residential Addresses
• Register of Secretaries (if applicable)
• Register of People with Significant Control (PSC Register)
• Copies of directors' service contracts
• Minutes of board meetings and shareholder resolutions

Worth knowing: Immediately after any director change, you must update your company's internal statutory registers, including the Register of Directors, as this is a core legal requirement.

Common questions

Official sources & further reading

This guide draws on the official guidance below. Rules, fees and individual circumstances can change; check the relevant source before acting.

• Appoint a director: overview - GOV.UK
• Company directors' responsibilities - GOV.UK
• Companies Act 2006, Section 168 - Resolution to remove director
• Guidance: Running a limited company - GOV.UK
• Telling HMRC about a new employee - GOV.UK

General UK information, primarily for private companies limited by shares. This is not personalised legal, tax or financial advice. An accountant or solicitor can help apply the rules to your situation.