Further provisions of the Companies Act 2006 relating to directors will come into force with effect from 1st October 2008. One of the more important provisions to note is a new requirement that every company must have at least one ‘natural’ person (ie an individual) on its board of directors. Although the current law requires that a private company must have at least one director and that a public company must have at least two directors, it has not previously been a requirement that an individual be appointed as director.
It is not unusual for companies to have only one or more corporate directors and therefore companies will be required to review their board arrangements and to appoint a ‘natural’ person to the board if this consists of only corporate directors at present.
A grace period has, however, been introduced in relation to companies which only had corporate directors as at 8th November 2006 (being the date upon which the Act came into force). Such companies will not have to appoint a natural person as a director until 1st October 2010. However, all other companies (including companies established since that date) will have to take steps to ensure that their board composition complies with the new requirements, on or before 1st October 2008.
If you do have any queries regarding the process for appointing directors, or require any other guidance regarding the provisions of the Companies Act, please contact your usual contact at Tods Murray or susan.mcfadyen@todsmurray.com.
Susan McFadyen