NB:
The above information is general and is intended as a summary only. Clients should seek further clarification if required before deciding if they wish to engage Nominee Directors. We expressly reserve the right to provide this service to anyone for any reason. We specifically will not provide this service to corporations with a payroll or who may have excise tax obligations. Upon provision of a Nominee Director, we would require you, as beneficial owner(s) of the company, to sign a Letter of Indemnity indemnifying our Director against all liabilities incurred by him by virtue of being so registered.
IMPORTANT NOTE:
If you wish to keep your name off the public records so that it is less easy to discern that you are involved with a company, then this is the service for you. The Nominee will sign all corporate documents, except those that are not lawful or that bring personal liability to the Nominee. There is a yearly charge for the Nominee service. By appointing our Corporate Nominee Director, you can remain anonymous from your company, as no personal details will be recorded at Companies House.
This service has been designed to allow our clients to retain their privacy for legitimate reasons in a world where your personal information can easily be obtained by anyone who knows where to look. This service is not to be used for any illegal purposes. If you are seeking anonymity for illegal reasons, please go somewhere else to incorporate. You will still control the company as an authorised representative (by General Power of Attorney), but it will not be possible to search Companies House records to identify you. This General Power of Attorney gives the Attorney authority to take decisions and actions on behalf of the company. This includes buying or selling property or shares, and signing cheques etc.
This General Power of Attorney allows the Attorney to open, operate, and close any bank or building society account in the company's name, and to sign cheques on behalf of the company.
If I am the sole Director, can I also be the Secretary?
NO. If there is only one Director, he or she cannot also be the Secretary; however, if there are two Directors, one can be Secretary as well. There are no qualification requirements for either Directors or Secretaries. They can be individuals or another company. They do not need to be a UK resident. Any adult can be a Director (anyone aged over 16 in Scotland), as can a corporate body. Both real and legal persons can be disqualified from acting as a Director.
If required, Coddan can provide professional Nominee Director, Nominee Secretary, and nominee shareholder services enhancing client confidentiality for an annual fee. To speed-up the company incorporation process, we will provide a Nominee Initial Director and nominee initial shareholders. When the company has been formed, the Director's name will be changed to the name of the actual Director. Shareholders will transfer shares to the owners.
Administration responsibilities:
whilst ultimate responsibility for corporate legal compliance generally rests with the Directors, every company MUST also have a Company Secretary. Company Secretary responsibilities normally include the administration of meetings, the maintenance of the company's administrative records, and the registration of share dealings. However, your company may also choose to allocate additional legal compliance responsibilities to the Company Secretary. Hence, in addition to basic secretarial compliance duties, other matters including the supervision of accounting, tax, and pension and insurance affairs may also come within the secretarial function.
Directors' company law responsibilities:
routine compliance with company law will often be the job of the Company Secretary, but ultimate responsibility, as far as the law is concerned, remains with the Board of Directors. Directors broadly have four areas of responsibility.
Good faith: Directors have a general duty to act in good faith in the best interests of the company, and a limited "duty of care and skill" towards the company.
Fair Dealing: there are legal rules which require fair-dealing by Directors in: the disclosing of interests in contracts between the Directors and the company; the payment of compensation to outgoing Directors; loans to Directors; and similar matters.
Statutory compliance: company law imposes responsibilities on the company, for example: requiring the public filing of accounts; preventing the company's funds being used inappropriately; and rules on the payment of dividends. Responsibility for complying with these requirements is imposed ultimately on the Directors. Failure means that both the company and its Directors can be penalised.
Creditors: duties may be owed to creditors especially if your company is in financial difficulty. Breach of such duties can result in the Directors having personal liability to the creditors. If the Directors disregard these matters, they can be required to compensate the company (or the creditor) for any loss suffered.
Position of Shadow director: it may be possible for a person outside the company, who influences its management, to be liable as if he were a Director – he is known as a Shadow Director.
Apart from the requirements of company law, i.e. the law relating directly to corporate administration, other laws impose obligations on the company, for example responsibilities under environmental, health and safety, and product liability laws. It is the responsibility of the Directors, the Company Secretary, and other senior managers to ensure that the company complies with these responsibilities even though such matters may be the day-to-day responsibility of the more junior managers. Breach of the requirements may well involve the company in liability to fines. The officers and senior managers with overall accountability may also incur personal liability, fines, or even imprisonment as a result of their own consent, connivance, or neglect in the infringement.
In many cases, the company will rely on outside professional and other advisers for guidance on these matters, as well as internal staff, but it is again the Directors who are ultimately responsible. You should develop an audit-type system for ensuring that your company is made aware of all applicable requirements, and then for ensuring that the requirements are complied with. In addition, key compliance issues should be the ultimate defined responsibility of at least one Board Member.
Company Directors’ responsibilities:
these include: keeping proper books of accounts and preparing accounts for presentation to the company's shareholders; filing accounts and returns annually with the Registrar of Companies; informing the Registrar of Companies of the appointment or retirement of any Director or the Company Secretary; informing the Registrar of Companies of any change in the situation of the company's registered office; calling and holding annual general meetings (at which annual accounts are presented); appointing auditors; and making sure that the company acts strictly in accordance with the powers and rules set out in its Memorandum and Articles of Association.
If a company in insolvent liquidation can be shown to have traded while insolvent before the liquidation, the court may make an order under the Insolvency Act 1986 requiring Directors to contribute personally to make-up any deficiency in the company's assets – providing the Directors knew, or ought to have known, that there was no alternative to an insolvent liquidation, and failed to take every step necessary to minimise loss to creditors. Trading while insolvent in these circumstances is known as "wrongful trading". Directors of a company which has gone into insolvent liquidation may also be ordered to contribute personally if it can be shown that any business had been carried on prior to liquidation for any fraudulent purpose or with intent to defraud creditors. This is known as "fraudulent trading".
Disqualifications often relate to new companies deliberately established to avoid the debts of insolvent predecessors. A Disqualification Order is made by the court, and the 1986 Act provides three "divisions" of disqualification. There are: disqualifications for general misconduct in connection with companies; disqualifications for unfitness either where a company has become insolvent or where it has been investigated; and other cases of disqualification.
If a person is convicted of an indictable offence in connection with the promotion, formation, management or liquidation of a company, or with the receivership or management of a company's property, a Disqualification Order may be made against him. The maximum period of disqualification under this section is five years if the Order is made by a Court of Summary Jurisdiction, or 15 years in any other case.
Persistent Breaches Of Companies Legislation:
a Disqualification Order may also be made against a Director for being persistently in default of the statutory provisions under which returns, accounts, or documents must be filed with, or disclosed to, the Registrar of Companies. A "persistent default" arises where, in the five years ending with the date of application for the Disqualification Order, the Director has been adjudged guilty of three or more defaults in relation to those provisions. The maximum period for disqualification under this section is five years.
Fraud In Winding Up:
the Court for Fraud may impose a maximum 15-year Disqualification Order during the winding-up of a company.
Disqualification For Unfitness:
the first case for disqualification because of unfitness is: where the company is insolvent and cannot pay its debts; where an Administration Order has been made; or where an Administrative Receiver has been appointed. The second case is subsequent to an investigation of the company under the Companies Act.
Consequences Of Contravention:
criminal penalties await persons who act in contravention of a Disqualification Order. The offence may result in imprisonment for not more than two years and/or a fine, or imprisonment for not more than six months and/or a fine, for Convictions on Indictment or Summary Convictions respectively. The Act also enables the court to “look through” companies who commit the offences, and to prosecute persons responsible for the contravention, or with whose consent or as a result of whose neglect the offences were committed.
The Secretary of State maintains a Register of Disqualification Orders. There is no contravention if the Director obtains the court's leave to act as Director of a particular company or companies while subject to a Disqualification Order. The court may grant Interim Leave for a disqualified Director to act in the period before the application for Leave is heard if proper undertakings are given.
Resolution To Remove Director:
a company can remove a Director before his office was due to expire. This can be done by an Ordinary Resolution of the company, for which Special Notice is given. A copy of this Notice must be sent to the Director the company seeks to remove, who is given the opportunity to address the shareholders at the meeting at which the vote is to be taken.
Accordingly, the decision to remove a Director in this way cannot be made by written resolution. The Director can also require the company to circulate any written representations that the Director may wish to make to the shareholders who received notice of the meeting. The company cannot contract out of the right to remove Directors under Section 303. However, it may be impossible to obtain a majority vote, under Section 303, if the Articles provide for weighted voting rights for particular shareholders on a resolution to remove a Director from office. The duties owed by Directors to the company fall into two distinct classes: a duty of care, and a fiduciary duty.
Duty of Care:
a Director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. Directors discharge both their equitable as well as their legal duty to the company if: they act within their powers; they act with such care as is reasonably to be expected from them, having regard to their knowledge and experience; and they act honestly for the benefit of the company they represent. It is another way of saying that Directors are not liable for errors of judgment.
A Director is not bound to give continuous attention to the affairs of his company. He is not bound to attend all such meetings, though he ought to attend whenever, in the circumstances, he is reasonably able to do so. In respect of all duties that, having regard to the exigencies of business and the Articles of Association, may be properly left to some other official, a Director is, in the absence of grounds for suspicion, justified in trusting that official to perform such duties honestly.
Fiduciary Duty:
in the normal course of the governance of the company's affairs, the fiduciary duties of the Directors are owed to the company alone; this means the company as a separate legal entity, not the shareholders. Creation of a collateral duty to shareholders will depend on the facts and circumstances of a particular case. The Directors should also remain impartial as between different groups of shareholders in the same company. However, the Directors cannot place the interests of the group of which their company is a member above those of the company itself.
Duties Towards Creditors & Employees:
while a company is solvent, its Directors do not owe strictly-defined fiduciary duties to the company's creditors, but are placed under a statutory obligation to consider the interests of employees. The Directors should act bona fide in the interests of the company, and not for any collateral purpose. They must exercise their discretion bona fide in what they consider, not what a court may consider, is in the interests of the company. The duty of Directors to take into account the interests of creditors is indirectly enforced through the rules which call for the Directors to maintain capital levels, and which impose personal liability for fraudulent trading and wrongful trading immediately before liquidation.
Directors Profiting From Their Position:
an important consequence of a Director's fiduciary duty to his company is the prohibition placed upon him from profiting from his position. In cases where the courts have found the Director to do so, he has been made liable to account. However, it is possible for the company to agree to a Director profiting from his position. Such agreement will be effective only if made after full disclosure to the company of the terms of the proposed transaction.
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