Managing Director vs. Company Director vs. Company Secretary

[humaxe5]

What is the difference between a Managing Director and a Company Director? And, also, what is the exact difference between a Company Secretary and a Company Director? I suppose that their responsibilities and duties overlap.

 

[SBlundell]

Usually, a managing director is a company director but a company director is not necessarily a managing director (hence finance director, operations director etc).

'Director' is usually used in the legal sense - i.e. fully appointed at companies house (except non-executive directors) and therefore the directors are legally responsible for the running of the company (in accordance with the shareholders' interests ). Various laws & responsibilities are inherrent for that.

[A little shady here] A company secretary is no longer a legal requirement but is basically the person responsible for administering the books of the company - maintaining the share register, documenting minutes etc. However (I believe) there are no inferred responsibilities in being the company secretary (except of course to do it to the best of your ability!).

To clarify - not necessarily the 'accounting' books of the company, but the legally required 'books'.

 

[humaxe5]

Could you please correct me if I'm mistaken?

As far as I understand a Company Director is a statutory director, the one who is registered by Companies House. Only he can sign third party agreements (trade partners, bank, etc.) on behalf of a company.

A Managing Director is a person who just manages a company, isn't he? He is only a manager, like a Financial Director, a Security Director, a Marketing Director, a Creative Director, etc. All these people are just employees who enter into an employment contract.
On the contrary, a Director's Service Agreement must be signed with a Company Director.

These managers do not obligatory have to be "a Company Director", although they can be? That means one person can be a Company Director and a Managing Director at the same time. He may sign a employment contract as well as a Director's Service Agreement.

Do I understand it correctly?

Nevertheless, I do not quite get what is the role of a Company Secretary. What is this post for if there is already a Company Director who signs on behalf of a company all contracts, Annual Return and Accounts, who negotiates with Companies House, HMRC and other public institutions?..
Thanks!

 

[internetspaceships]

The difference you are looking to clarify here is the difference between an Executive Director and a non Executive Director.

The former is listed at Companies House whilst the latter isn't.

The role of a Company Secretary was basically made redundant a couple of years back and now the Executive Directors take the responsibilities of that old role.

 

[sanjiv]

Managing Director, Financial Director etc. are all Directors at companies house however the initial part of the title is the job that the particular company Director has.

 

[SBlundell]

I think internetspaceships & sanjiv have answered better than I could there!

I don't think a company secretary has any particular responsibility, they are really a glorified receptionist - i.e. the 'registered' initial contact who would historically have put you in touch with the person you want.

As mentioned, they are pretty much redundant now - I don't think they are even required.

 

There is quite a lot of confusion here, so I will add to it.

The term Director is all encompassing - any appendage (managing, sales, commercial etc) to that name is entirely discretionary and relates to internal heirarchy and specified roles.

An executive director is registered at Companies House and assumes all of the legal responsibilities (as outlined in the book sent on registration).

A non-executive director is purely nominal and does not assume those responsibilities.

Signing of forms, documents, cheques etc is laid down in the Memorandum & articles of association, though executive directors take ultimate responsibility for the actions of the Company.

Company Secretary is no longer a legal requirement for SMEs but still exist. They take responsibility for legal/paper aspects of the business such as filings with HMRC / Companies House and other statutory filings. This job carries no legal responsibility, but is often combined with that of FD.

Clear as mud?

 

[The Resolver]

Just to correct smallmas and internetspaceship a non-executive director IS registered at Companies House as he is a full member of the Board of Directors. The only significance of being 'non-executive' is that he is not a member of the management team employed by the company. A professional advisor or experienced businessman is often appointed as a NED as an in-house advisor to the other directors, as also often is a passive investor. He will typically only attend the offices for board meetings. He may or may not hold shares.

True directors, are members of the Board and thus have responsibilities and liabilities to the shareholders. Managing Directors will usually be Board members ie true directors, and will be the one mainly in charge of executive decision making.

A practice has evolved of using the word 'director' within the title of a management position for people who are not true directors and not members of the Board eg 'creative director', 'marketing director' etc. This should be avoided as it may make the company liable to contractual obligations not intended for that person to commit them to (because the third party thought they were dealing with a board member).

 

[internetspaceships]

Now there's something I didn't know. Thanks Graham

I do agree too on your point about the title Director being used willy nilly for job roles too.

I guess it appeals to some people.

 

Just to correct smallmas and internetspaceship a non-executive director IS registered at Companies House as he is a full member of the Board of Directors. The only significance of being 'non-executive' is that he is not a member of the management team employed by the company. A professional advisor or experienced businessman is often appointed as a NED as an in-house advisor to the other directors, as also often is a passive investor. He will typically only attend the offices for board meetings. He may or may not hold shares.

True directors, are members of the Board and thus have responsibilities and liabilities to the shareholders. Managing Directors will usually be Board members ie true directors, and will be the one mainly in charge of executive decision making.

A practice has evolved of using the word 'director' within the title of a management position for people who are not true directors and not members of the Board eg 'creative director', 'marketing director' etc. This should be avoided as it may make the company liable to contractual obligations not intended for that person to commit them to (because the third party thought they were dealing with a board member).

Absolutely correct & I'm blushing at having made the same mistake.

 

[SBlundell]

Lots of very clever know how

I bow to your superior wisdom

 

[mahutchinson]

I feel like making a disparaging remark at the ignorant comments made about company secretaries but I will refrain. If you don't think a 6 figure salary and half a million in share options constitutes a worthwhile career then you must be doing pretty well.

 

[kulture]

I feel like making a disparaging remark at the ignorant comments made about company secretaries but I will refrain. If you don't think a 6 figure salary and half a million in share options constitutes a worthwhile career then you must be doing pretty well.

That said, many company secretaries for many small businesses have no salary, no shares, and no real reward. They are simply friends or relations or partners who were named in the company because someone thinks that the company has to have a company secretary.

 

[internetspaceships]

I feel like making a disparaging remark at the ignorant comments made about company secretaries but I will refrain. If you don't think a 6 figure salary and half a million in share options constitutes a worthwhile career then you must be doing pretty well.

Thats nice well done Sir I applaud you. Still doesn't alter the fact that the vast majority of Company Secretaries don't get a penny.

 

[humaxe5]

When I formed my first company with the help of the registration agent I was told that the secreatry is obligatory so they appointed as the secretary themselves. I was charged 160 pounds for that. It really surprised we as they haven't done anything special at all. In fact, they just registered in the company record that they were the secretary. I can't make up what is this post for. I am glad that this post isn't obligatory any more.

 

[humaxe5]

I would like to specify one more thing. E.g. somebody is the Company's Direcor, Managing Director, Financial Director and Company's Secretary at the same time.

Company's Director and Company Secretary are appointed by the law, Managing Director and Financial Director are the posts by agreement. That means that this one person is going to get four salaries?..

And, also, how is it possible to make clear what post he represents while signing the documents.

I know that the Company's Secretary and the Company's Director may be a company as well. But as far as I understand the company cannot be the Managing Director or the Financial Director, these posts may occupy just a person.

So it may occur that one forms a company ''X'' and ''Y''. He/she is the shareholder in these companies. ''X'' is appointed Company Director and Company Secretary in ''Y'', and this person is a Managing Director and a Financial Director in these companies as well:|