Whether you have a private or a public company, the ones responsible for appointing a new company director are the company’s shareholders. They are also the people who decide when it’s high time to let an appointed director go.
When it’s a private company, this process of removal and appointing is done according to the Article of Association of that company. In the case of public companies, the company’s shareholders are also making this decision, but they have to obey some rules.
Namely, The Companies Act from 2006 is the one that allows shareholders of the company’s board to appoint company directors, or remove them from their current position as directors, for that matter. The maximum period a director can hold their position is five years. Because of this rule, removing and hiring new directors has to happen in each company. We’ve composed a list of five essential tips when appointing a director, skills that make a director good, as well as hints that show it’s time to replace an existing director.
The five essential tips when appointing a director in the UK
When appointing a director in UK, you should ensure that the person you want to appoint fulfills the following conditions.
- They can’t have a criminal record of imprisonment or a sentence for any type of breaking the law;
- They should be residents of the United Kingdom, which means they must have been residents of this country for no less than twelve months. They also can’t come to the UK just to get employed;
- They mustn’t have been convicted or detained for any period;
- They have to be between the ages of 25 and 70. However, there are exceptions to this rule if the company passes a special resolution and the Central Government approves it;
- They have to be managerial figures in one or more corporations.
Suppose the person the board of shareholders of a particular company wants to hire fulfills all of the steps mentioned above. In that case, they’re worthy of getting appointed as a new director of the company. The board should handle each appointment with great care because the new director will represent the company in every sense of the word.
The primary skills each company director should have
The person that the company’s board of shareholders is considering must have some basic skills. After all, the company’s director manages it and represents it in both internal and external affairs. The three primary skills that make a director good are:
Each business has a specific workflow and has a constant flow of new ideas and contracts. The director has to be curious to make new ideas come to light. People who prefer to stay in their comfort zones shouldn’t be directors.
Good management skills
The director of each company is the person that has to manage all the finances, understand potential risks for the company to prevent them, and fulfill all the expectations the board of the company has. That means the director must also have excellent governing skills.
As each company constantly collaborates with other companies, its director should present it to others uniquely and skillfully. External affairs keep the business going, so the director might also be a great communicator of ideas.
Directors are not the totalitarian dictators of a company – they are always a part of a collective board. For this reason, the director must be great in communication and understanding others which is what emotional intelligence enables.
How to remove an existing director from their position
When the board of shareholders sees that it’s time to replace an existing director with a new one, they have to remove them from their position. They can achieve this in two ways. The first is to write a notice which states the director is worthy of removal.
The second is turning to The Companies Act, which enables the removal of directors when a board lacks articles of association. Both ways will remove the director, but they will cost the company some money because the removed director still has all the rights and protections stated in the service agreement upon employment.
We hope you have a better understanding of what it takes to be a good director and when it’s time to replace one who isn’t performing well. When appointing a new director, make sure you check all the tips we listed above and ensure the director-to-be has all the essential skills that make them a good leader.
The entire point of appointing a new company director is to entice business growth and prosperity. With everything mentioned in this post, you now have a clear understanding of what to look for in a new company director. With a qualified leader, the company will be on the fast track to ultimate success.
Tips For Appointing A Company Director