Directors — appointment, duties, removal

BLP.05 — Directors: appointment, duties, removal

Who is a director

A "director" includes anyone occupying the position, whatever called (CA 2006 s.250). Watch the categories:

• De jure — validly appointed.
• De facto — acts as a director without valid appointment.
• Shadow — a person on whose instructions the board is accustomed to act (s.251); professional advisers acting in that capacity are excluded.

A private company needs at least one director; a public company at least two (s.154). Every company must have at least one director who is a natural person (s.155). Minimum age 16 (s.157).

Appointment

Method follows the articles. Under Model Articles (private), art 17, directors are appointed by ordinary resolution of members or by decision of the directors. There is no statutory requirement to rotate. Particulars must be filed at Companies House (form AP01) within 14 days and entered in the register of directors.

Duties (CA 2006 ss.171–177) — owed to the company, not shareholders

• s.171 — act within powers / for proper purposes.
• s.172 — promote the success of the company for the members as a whole (the s.172(1)(a)–(f) factors); shifts to creditors when insolvency threatens (BTI v Sequana 2022).
• s.173 — exercise independent judgement.
• s.174 — reasonable care, skill and diligence (dual objective/subjective test — Re D'Jan of London).
• s.175 — avoid conflicts of interest (no-conflict rule; can be authorised by independent directors).
• s.176 — not accept benefits from third parties.
• s.177 — declare interest in a proposed transaction (vs s.182 — existing transaction, a criminal offence if breached).

Note s.182 declaration is required even by a sole director. Breach remedies are equitable (account, rescission, damages).

Removal

Members may remove a director by ordinary resolution under CA 2006 s.168, regardless of the articles or any service contract. Special notice (28 days) to the company is required (s.169); the director may make written representations and speak at the meeting.

Common traps

• s.168 cannot be ousted by the articles, but weighted voting rights (Bushell v Faith clauses) can frustrate it.
• Removal under s.168 does not defeat a wrongful-dismissal claim under the service contract, nor an unfair-prejudice petition (s.994).
• Distinguish disqualification (CDDA 1986) from removal.
• s.177 (proposed) vs s.182 (existing) — and a director still counts in the quorum/vote under Model Article 14 only where permitted.