Act Now to Appoint an Individual Director

For those companies who still only have corporate directors, the deadline for appointing an individual director to the board is fast approaching.

Until recently, companies could have a board of directors made up only of bodies corporate and this was used in some companies as a means to reduce personal liability for those running the company. However, from 1 October 2008, the Companies Act 2006 introduced a requirement for all companies to have at least one director who is a "natural person". This was subject to a grace period for companies which had no natural directors as at 8 November 2006 (the date on which the Companies Act received Royal Assent). The grace period ends on 30 September 2010. From 1 October 2010, all companies must have at least one natural person as a director.

Failure to appoint a natural director could result in fines of up to £5,000 for the company itself and all of its officers, with the possibility of additional daily default fines being issued. Affected companies should take steps now to appoint a new individual director to avoid missing the deadline.

But it is not all bad news for boards of directors. Newly appointed directors will be able to take advantage of the privacy provisions introduced by the Companies Act in October 2009, enabling individual directors to keep their residential addresses off the public register by providing a separate service address. See Change Review for further details.

To find out more about appointing directors and the new privacy provisions, please speak with your usual contact at Mishcon or get in touch with Nick Davis.