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The role of Directors and Secretaries
This note is a snapshot guide and should be read in conjunction with the relevant legalisation or subject to professional advice

Limited Companies

A limited company is in law a separate entity that is regarded as a legal person in its own right. A company can enter into agreements, purchase property and is separate in law from the people who run it.

Directors of the company will have limited liability if the company fails. This means that if the company goes into liquidation the owners of the company (the shareholders) will only be required to pay the debts they have agreed to pay.

A limited company may be established through our own firm either providing a name off the shelf or a name you choose yourself subject to that name not already being used by another company. Further, there are dangers in using a name too similar to another "companies name" if there could be a danger of you being regarded as trading off the other "company reputation".

If a company is no longer required it can go into voluntary liquidation or an application can be made for it to be struck off the register.

The company director.

Within reason any person may become a company director. There are four major restrictions:

  • The person must not have been disqualified by a court from acting as a company director
  • The person must not be an undischarged bankrupt.
    (both 1 and 2 may be overridden with leave of the court)
  • If the company is a plc anybody over the age of 70 may be a director unless formally approved in general meeting.
  • A person must be mentally cometent and of sufficient age to understand and obligations and responsibilities being entered into.

Every company director is personally responsible to ensure that certain statutory documents are sent to the Registrar of Companies at Companies House when they are required to do so. There are certain prime requirements which include:

  • accounts must be submitted for limited companies.
  • an annual return form must be submitted
  • if directors or secretaries or their particulars change Companies House must be notified
  • if the registered office changes Companies House must also be notified.

Failure to file annual returns or accounts is regarded as a criminal offence. Any director found to be responsible could be liable to a fine of up to £5,000 for each offence and will have a criminal record.

Alternatively, if the Registrar of Companies believes the company is no longer working or operating it could be struck off the register and dissolved. If this happens any assets of the company, including bank accounts or property would become the property of the Crown.

Prosecutions do occur and it is important that statutory requirements are complied with.

If accounts are delivered late there will automatically be a late filing penalty imposed by Companies House. There may be further fines imposed by a court. Automatic fines range from 100 to 1,000 for a limited company and 500 to 5,000 for a public limited company (plc). You usually have 10 months from the accounting reference date to submit accounts if you are a limited company or 7 months if you are a plc.

It is important to remember that your professional advisers ie. accountants, may be instructed to prepare accounts for you and return them. However, the responsibility and liability remains with the Directors. It is therefore the Directors' responsibility to ensure that all the necessary information to prepare accounts and when required to get them audited is provided to the accountant in sufficient time. If there are worries about the time period accountants or other financial advisers should be chased. It is not an accountant's responsibility to file accounts. It is the responsibility of the directors.

If accounts are delivered late


As a director of a private limited company, you normally have a maximum of 10 months from the accounting reference date in which to deliver your company's accounts to the Registrar. The accounting reference date is the date to which your accounts must be prepared.

As a director of a public limited company, you normally have a maximum of 7 months from the accounting reference date in which to deliver your company's accounts to the Registrar.


Important if your company's first accounts cover a period of more than 12 months, they must reach Companies House within 22 months of the date of incorporation for private companies and 19 months for public companies.

If accounts are received late, the company will automatically be charged a 'late filing penalty'. The late filing penalty will be calculated according to the following scale:

 Length of delay

 Private
 company

 Public
 company

 3 months or less

 £ 100

 £ 500

 3 months one day to 6 months

 £ 250

 £1000

 6 months one day to 12 months

 £ 500

 £2000

 More than 12 months

 £1000

 £5000

The company secretary

Section 283(1) of the Companies Act states that every company must have a secretary. A company may only have one director but it must also have a secretary. There will therefore always be two officers of a company.

The secretary of a private limited company needs no formal qualifications. However, a secretary of a public limited company must be qualified or have the proper knowledge and experience to carry out the functions of a company secretary. Section 286 of the Act (qualifications of company secretaries) says that the directors of a public limited company must make sure, as far as reasonably possible, that the secretary, or each joint secretary, is a person who appears to them to have the proper knowledge and experience to carry out the functions of company secretary. In addition, the secretary must also be a person who:

  • is a member of any of the following bodies:
    the Institute of Chartered Accountants in England and Wales;
    the Institute of Chartered Accountants of Scotland;
    the Institute of Chartered Accountants in Ireland;
    the Chartered Association of Certified Accountants;
    the Institute of Chartered Secretaries and Administrators;
    the Chartered Institute of Management Accountants;
    the Chartered Institute of Public Finance and Accounting; or
  • held the office of secretary (or assistant or deputy secretary) of the company on 22 December 1980; or
  • held the office of company secretary of a company (except a private company) for at least 3 out of the 5 years immediately before his or her appointment as secretary; or
  • is a barrister, advocate or solicitor called or admitted in any part of the UK; or
  • is a person who appears to the directors to be capable of carrying out the functions of company secretary, because he or she holds, or has held, any other similar position or is a member of any other body.

Special duties

As the secretary is an officer of the company under section 744 of the Act, they may be criminally liable for defaults committed by the company. For example failure to file - in the time allowed - any change in the details of the company's directors and secretary, and the company's annual return.

The secretary may also have to make out a statement of the company's affairs if an administrative receiver or a provisional liquidator is appointed, or if a winding-up order is made. (Sections 47 (Section 66 for Scotland) and 131 of the Insolvency Act 1986.)

Other duties

The company secretary usually undertakes the following duties:

(a) Maintaining the statutory registers. These are:

  • the register of members (section 352);
  • the register of directors and secretaries (section 288);
  • the register of directors' interests (section 325);
  • the register of charges (section 407 or 422 for Scottish companies); and
  • for public companies only, the register of interests in shares (section 211).

(b) Ensuring that statutory forms are filed promptly. You cannot simply send a letter to notify the Registrar that you wish to change the situation of the company's registered office or that changes have occurred among directors or secretaries or their particulars. You should normally use forms 287 and 288a, b or c as appropriate. You may also use the annual return Form 363s in some circumstances if the return is due at the convenient time. Changes of directors' and secretaries' details must be notified within 14 days. There are many other forms that need to be delivered to the Registrar.
(c) Providing members and auditors with notice of meetings. You must give them 21 days written notice of an annual general meeting. You must give them 14 days written notice of a meeting which is neither an annual general meeting or a meeting to pass a special resolution. If you are the secretary of an unlimited company, the written notice required is 7 days.

(d) Sending the Registrar copies of resolutions and agreements. You must send the Registrar copies of every resolution or agreement to which section 380 applies, for example special and extraordinary resolutions, within 15 days of them being passed.

(e) Supplying a copy of the accounts to every member of the company, every debenture holder and every person who is entitled to receive notice of general meetings - also copies demanded by anyone under section 239 of the Act. You must send accounts at least 21 days before a meeting at which they are to be laid - see section 238 of the Act.

(f) Keeping, or arranging for the keeping, of minutes of directors' meetings and general meetings.

(g) Ensuring that people entitled to do so can inspect company records. For example, members of the company and members of the public are entitled to a copy of the company's register of members, and members of the company are entitled to inspect the minutes of its general meetings and to have copies of these minutes.

(h) Custody and use of the company seal. Companies no longer need to have a company seal, but if they do, the secretary is usually responsible for its custody and use. (Company seals can be bought from legal stationers and company formation agents.)

Does a company secretary have any powers?

No, but the Act allows them to sign the following re-registration applications:

  • the re-registration of a limited company as unlimited - section 49(4) of the Act;
  • the re-registration of an unlimited company as limited - section 51(4);
  • the re-registration of a public company as a private company - section 53(1)(b); and
  • the re-registration of a private company as a public company - section 43(3).

The secretary is also allowed to sign most of the forms prescribed under the Act.

Does a company secretary have any powers?

No, but the Act allows them to sign the following re-registration applications:

  • the re-registration of a limited company as unlimited - section 49(4) of the Act;
  • the re-registration of an unlimited company as limited - section 51(4);
  • the re-registration of a public company as a private company - section 53(1)(b); and
  • the re-registration of a private company as a public company - section 43(3).

The secretary is also allowed to sign most of the forms prescribed under the Act.

What rights does a company secretary have?

They depend on the terms of his or her contract with the company. The secretary has no special rights under the Act.

What forms are required during the operation of a company?

There are numerous forms which may require to be filed at Companies House but the principal ones include the following:

  • Accounts

All limited companies, whether trading or not, must keep accounting records and file accounts for each accounting period with the Registrar. There are various exemptions that may be claimed but in general accounts must include the following:

    • Directors report signed by a director or company secretary
    • A balance sheet signed by a director
    • A profit and loss account
    • An auditors report signed by the auditor
    • Notes to the accounts
    • Group accounts if applicable

Directors are personally responsible to ensure accounts are prepared and delivered to Companies House. Failure to do so may result in a criminal conviction.

  • Annual Returns

An annual return is a form showing at the date it is prepared who the directors are, who is the secretary, location of the registered office, the identity of shareholders and the total share capital. These are sent out in a pre-prepared form which needs to be checked carefully before being returned.

  • Registered Office

Every company must have a registered office address. It is the legal home of the company to which any official notices, court papers, documents or other papers will be sent. It must be a physical location and not simply a post office box. People need to be able to deliver documents there by hand on occasions and may have the right to inspect the company's records.
Change of accounting reference date - Form 225

Every company has an accounting reference date, which is the date to which the company's accounts are prepared each year. This date can be changed using Form 225.

Change of directors and secretary and their details - Forms 288


There are three types of Form 288.

  • Form 288(a) is used for the appointment of an officer.
  • Form 288(b) is used for an officer ceasing to act (resignation, removal, death etc).
  • Form 288(c) is used for a change in details of an officer, for example, a change of name or new residential address.

All changes to directors' and secretary's details must be sent to the Registrar within 14 days of the change

Allotments of shares - Form 88(2)


This form should be sent to Companies House within one month of the shares being allotted.

Resolutions

Copies of any special or extraordinary resolutions and certain types of ordinary resolutions, need to be sent to Companies House within 15 days of them being passed by the company. When a resolution alters the memorandum or articles of a company, a copy of the amended document must also be sent in at the same time as the resolution .

Mortgages and charges

Details of any mortgage or charge created by the company must be sent to Companies House within 21 days.

Quality of documents


What happens to documents sent to Companies House?

The documents and forms you deliver to Companies House are scanned to produce an electronic image. The original documents are then stored, and the electronic image is used as the working document.

When your business contacts view the company record, they see the electronic image reproduced on-line. So it is important not only that the original is legible, but that it can also produce a clear copy.

This is a few quality guidelines to follow when preparing a document for filing at Companies House.

What happens if my documents do not meet the guidelines?

Section 706 of the Act allows Companies House to reject documents that cannot be captured electronically, giving a notice saying why they are unacceptable. An acceptable copy must be delivered within 14 days of the notice (otherwise we treat the original as not having been delivered).

How should documents be set out?

Every document delivered to the Registrar must state in a prominent position the registered number of the company, and must comply with any requirements specified by the Registrar relating to the legibility of that document.

Briefly, documents should be on A4 size, plain white paper between 80gsm and 100gsm in weight with a matt finish. Text should be black, clear, legible, and of uniform density. Letters and numbers must not be less that 1.8mm high, with a line width of not less than 0.25mm.


When you fill in a form:
  • use black ink or black type;
  • use bold lettering (some elegant thin typefaces and pens give poor quality copies);
  • don't send a carbon copy;
  • don't use a dot matrix printer; and
  • remember - photocopies can result in a grey shade that will not scan well.

When you complete other documents, please remember:

  • the points already made relating to completing forms;
  • to use A4 size paper with a good margin;
  • to supply them in portrait format (that is with the shorter edge across the top);
  • to include the company number in the top right-hand corner of the first page.

Important: coloured ink can drop out (disappear) when a document is scanned to produce an image. To prevent this - always use black ink to complete and sign all documents.

What are the most common problems to avoid?

Glossy accounts
If you are producing colour-printed glossy accounts, please save them for your shareholders and others who will appreciate them. We still need black on white with a matt finish. A typed unbound version or printer's proof is ideal, provided it has the necessary signatures.

Members lists
Our requirements on document quality apply equally to the lists of shareholders that accompany annual returns and allotment forms.

If these are computer prints, it is essential that the print quality is good. We have particular problems with lists printed on green-lined computer paper. We can handle members lists on paper up to 14.5" x 12".

We will accept documents delivered on certain types of computer-generated microfiche (comfiche) on a black master - as an alternative to paper - provided we can duplicate them on our diazo machines.

We may also be able to accept magnetic tape for very large listings.

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