Sole Directors – Is One Director Enough?

/ Partners, SME

Author: Johan Da Silva

Tags: directors, Law

At AIMS Accountants, we always seek to deliver technical content in our areas of expertise, but other areas where we cannot commit to, we also have great business partners such as First Corporate Law Services that can deliver. They provide an extensive range of incorporation and post incorporation services to solicitors and accountants, providing any type of share restructure, purchase and reduction of share capital, to more complex procedures such as shareholder agreements.

On this occasion, Adrian Smart, Director of FCLS, has written a technical article on Directors, as a judgement in a recent case means you may need to review your company. So, let them explain for themselves by reading below on recent changes to company law that might affect some of our clients.

A judgement in a recent case means you should update your Articles.

All limited companies must have articles of association, a set of rules to be followed in running the company, effectively they are the company’s constitution.

“Model Form” articles are in a standard format (prescribed by the Companies Act) and that Model Form will apply if the company does not choose to have a set of articles specifically prepared for it. There are a number of reasons why the Model Form articles may not be suitable, and a recent court case has highlighted one such issue, the number of directors needed to form a quorate meeting.

Effectively the Court ruling means that a company which uses the Model Articles must have at least two directors to manage its business and make decisions about the company. You may be refused finance and Dividend transactions (amongst all other business decisions) may be deemed invalid.

The issue applies to companies incorporated under the Companies Act 2006.

So, what do you need to do if you think you might be affected?

Talk to your advisors about what the options are – which could first be making sure you have your articles checked and any amendments made. Who do we work with matters, and at AIMS we know the difference that we can make to your business.

Things change all the time and SMEs need to stay on top of those changes, it’s not always easy. We work closely with our clients, so we know that often they turn to their accountant for help with things other than their tax and accounting. That’s why AIMS works with so many great suppliers who are trusted experts in their field and who can help our clients in a way that we know would be consistent with the tax support we are offering.

To find out more about First Corporate Law Services visit here. Find your local AIMS Accountant today.