When is a Director not a Director?
Sep 22, 2017
It might sound like a strange question. But it’s one that should be on the radar of anyone who is running, or working in a senior position for, a company.
Directors are not always what they seem. And that’s largely because of the different categories that can exist. At the top are official company directors; those people registered at Companies House and who hold the full range of (often onerous) responsibilities that go with directorship. They will work under a director’s service agreement, and they’ll owe duties to the company that are more extensive – and that carry potentially more serious consequences if breached – than those owed by others in the business.
Then there are people who are directors in name alone; a communications manager who is given the title ‘Director of Communications’, for example. They’re not registered directors. They don’t, on the face of it, owe the same duties as directors do or carry the same level of responsibility or enjoy the same rights.
And then there is a middle category of senior individuals who look like directors, act like directors, perhaps even hold themselves (or are held) out as directors – but who do not have an official directorship.
In any situation in which a person is labelled a director, or appears to be a director, there is the chance of confusion about what they can, can’t, must and mustn’t do. And that can cause problems both for them and for the company. On an individual level, they may find that they are treated as a registered director would be; they are expected to act as a director would, and are held to account for relevant failures. And on a corporate level, the organisation may find itself bound by and liable for the decisions, actions and omissions of someone who was never actually authorised to behave as they did. The point is that even though a person is a not a registered company director, they may (depending on the circumstances) still be treated in law as if they were.
That’s just a snapshot; we could go on. But, for now, our message is that whether you are an individual or a business, understand what directorship means. Insufficient clarity around job titles, responsibilities, rights, powers, and obligations can create significant problems.
If you need clarification or are worried about the responsibilities you or a member of your staff may be liable for, get in touch with our business team today who will be able to assist you with your query. Tel: 01264 353411, email: firstname.lastname@example.org or fill in our no obligation enquiry form and we will be in touch shortly to assist you.
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