Additional Director?

[2016]

Hi All,

Total newbie here but looking forward to getting involved and help anywhere I can.

 

[2016]

Forgot to ask the question!!

And it is: If you are a single director (i.e. £100 ltd) is it only me who can appoint additional directors?

It might sound a daft question but there is a valid reason for asking as will come out later or possible in another string.

 

[john1989]

http://www.netlawman.co.uk/ia/appointment-removal-company-directors

 

[2016]

Thanks john1989 for the link but this says shareholders. So in the case of a £100 ltd where I standard package only 1 share is issued, I am the shareholder?

Therefore I have to appoint any additional drectors?

Sorry for sounding a bit dense...

 

[john1989]

I am not sure what you mean by a £100 ltd?

Do you mean you are currently the sole director and shareholder with 1 shareholding of £100?

 

[2016]

Yes I think so.

The Memorandum or Association lodged at companies house when the company was set up, shows me as the sole subcriber of £100 ordinary shaes of £1 each

I set up a company via an accountant and I think they charged me around £100 to set the company up.

 

[john1989]

Yes that means you are a shareholder.

You can appoint and terminate directors.

 

[2016]

OK Thanks.

So no-one else should be able to become a director without me appointing them first?

That's the reason for asking the question, because someone else has set themself up as a director of the company without my prior knowledge.

 

[2016]

The person was supposed to become a director at some point but they did this without my knowledge and they have done other things that I'm finding out about that I also didnt know!

My solicitor is shouting fraud/illegal (pay me £500 up front to sort this out) but I want to try to sort this out amicably. I just want to know that I'm right in saying you had no right to make yourself a director that only I could put you forward for appointment and for you to do this yourself is illegal and then hopefully we can sort out the other stuff???

 

[2016]

Any more on this?

I want to speak to the person 'but my solicitor is saying under no circumstance' I should. I just want to be able to say, look what you did was wrong and this is what should have happened and know that I'm right and hopefully sort this out before it all goes pear-shaped!

So ANY advice on what should have happened to put pointers forward would be much appreciated.

 

[Chris Ashdown]

So are you saying you still want hi onboard even though he has passed himself off as a director and used the powers of being a director, if so you need your head examined as he is taking you for a ride and you dont even know what else has been done in your companies name

 

[kulture]

I would strongly suggest that you take the advice of your solicitor. He/She will know far more of the facts than any one here. I would also suggest that you ask for some training/advice on what it means to be a shareholder, a director, and what a company is.

 

[Clare@ClarityTaxation]

The approval of an existing director, or other authorised person, is required in order to appoint a new director. You can find the paper form at Companies House, which lists who can appoint a director on the third page where you sign it, or you can complete it online too via Companies House webfiling.

How did he appoint himself, paper or online? If he used the paper form, he'd have needed your signature.....

There's some good info on the Institute of Directors website (I can't link to it because I'm a newbie, but google IoD and appointing directors).

I do agree with the above posts though, this information is good for your peace of mind but I'd abide by the Solicitor's advice and avoid any confrontation as it could prejudice future legal proceedings.

 

[Bob]

From a brief look at what you have posted, I would register the company for the PROOF scheme at Companies House which is free and prevents unauthorised filing. If you believe that the appointment of the director is fraudulent, I would then terminate the appointment on the same day he appointed himself. By all means private message me the company name and I will look to see what has been filed

 

[john1989]

From a brief look at what you have posted, I would register the company for the PROOF scheme at Companies House which is free and prevents unauthorised filing. If you believe that the appointment of the director is fraudulent, I would then terminate the appointment on the same day he appointed himself. By all means private message me the company name and I will look to see what has been filed

I messaged the OP earlier offering the same.
Probably should have said here too.

Either way, should hopefully be something that can be sorted without legal involvement for the time being.

 

[2016]

Thanks to Bob and john1989.

I have pm'd both of you.

 

[Mike Hutchinson]

A director can only be appointed by resolution of the current directors or, less commonly, the shareholders. They cannot appoint themselves as they have no authority to do so.

 

[Bob]

A director can only be appointed by resolution of the current directors or, less commonly, the shareholders. They cannot appoint themselves as they have no authority to do so.

Electronic filing sometimes overrides the law
Which is why we always used to register all of our clients for the Companies House PROOF system

 

[Mike Hutchinson]

Electronic filing certainly does not override the law. The legal proof is the register of directors, held by the company and the directors can only be changed by the current directors or shareholders. If the board did not agree it, then the appointment is invalid.

 

[Bob]

Electronic filing certainly does not override the law. The legal proof is the register of directors, held by the company and the directors can only be changed by the current directors or shareholders. If the board did not agree it, then the appointment is invalid.

Maybe override was the wrong word Problem is that these days most individuals forming companies online have neither a register of directors nor a register of members.
I am well aware of the legislation and we used to maintain electronic registers for our clients on IRIS Company Secretarial and provide printout records to our clients.
In this particular case, I suspect that you would find that none of these records were either maintained or indeed understood

 

[Quality Formations]

The ability to appoint directors comes from the Memorandum and Articles of Association. Normally it is the shareholders who appoint new directors though directors can recommend new directors to the shareholders .

 

[The Resolver]

Once you have registered yourself on the PROOF scheme you can either apply to rectify the Register (the form is here) to show he was never a director or pass a Resolution to remove him as director. You should take your lawyers advice on which path to pursue.

Given that you seem to have allowed him to act as if he was a director, so he may have incurred liabilities on the company to third parties, it may be wiser to pursue the removal path. The benefit is that will mean he has liability under company law for any past breaches of his duties as director (to work for its success, no conflict of interest etc).Whilst he may have liability anyway for fraudulent self-appointment he may seek to defend himself on such a claim by arguing you said it was OK for him to do that. His word against yours. Given you seem to have allowed him a free hand to act as if he was a director (even though you didn't beforehand know he actually claimed that role) a court might prefer his version of what was said. But by accepting his period of directorship (and simply removing him by Resolution of the shareholders i.e. just yourself) he has less of a defence to any claim for breach of his statutory duty and the damage you can show that he has caused the company.

Please note that you will need to serve 28 days notice on him of meeting for his removal at which he can attend to try to persuade you not to take that step. That could present a problem in the interim but obviously you should have to take all steps to prevent him from taking any action in his last days as a director. Of course if you wanted to break the rules yourself you could just file the Removal notice (see here) yourself .....but I couldn't possible suggest that!