Limited companies are currently permitted by law to be a director of another limited company, but companies must have at least one natural person as a director under the Companies Act 2016. However, whilst corporate directors are to be abolished under the Small Business, Enterprise and Employment Act 2015 (2015 Act) – the relevant provisions have been postponed once again. They were originally due to come into force in October 2015.
Under the 2015 Act, only a natural person can be appointed as a director of a company – unless the appointment falls within one of the exceptions provided for by regulations. The rule change is part of the drive to increase corporate transparency.
Announcing the postponement of the abolition, Companies House said: “The detail of these exceptions are still under development. Any further information including a date for implementation will be provided on GOV.UK as soon as it’s available.”
We will keep a watch on how the Government will approach the ban on corporate directors; the extent to which it will apply; and how it may affect our corporate clients.
How can we help?
We provide companies with expert company and corporate governance advice. If you have any concerns about the implications of the planned abolition of corporate directorships, or any other company or corporate governance issues, contact the experienced corporate solicitors at Herrington Carmichael for specialist advice.
Please contact Michelle Lamberth or Yavan Brar on 0118 977 4045.
This publication reflects the law at the date of publication and is written as a general guide only – it is not intended to contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.