The Companies Act 2006 has changed the rules on appointing a ‘corporate director’ as a company officer. Historically it has always been possible to make a corporate body (in other words another company) a director of a UK registered company. The Companies Act now prevents new companies from being formed where there is no natural director. All companies registered after 01 October 2008 must have one natural director (in other words a genuine person) appointed as a company director.

If a company was registered before 01 October 2008 then time has been allowed for companies to make the required changes. The time allowed depends on when the company was registered.

If the company was registered before 08 November 2006 then the company must appoint a natural director by the 01 October 2010. There is however the following additional criteria the company must fulfill before this 2010 date applies –

> On 08 November 2006 the company must have had at least one corporate director

> On 08 November 2006 the company must not have had any natural person directors

> If a company had a natural officer appointed on 08 November 2006 then the company will need to maintain or reappoint a natural person as a director on 01 October 2008.

If the company was registered after 08 November 2006 – they must appoint a natural director by the 01 October 2008.

The 08 November 2006 is significant as this is the date the Companies Act 2006 received Royal Assent.

The result for Failure to comply with these rules -

Where a company is found to be in default it may be subject to penalties for failure to comply. These penalties can include fines up to £5000 for both the company and the company officers in default plus additional daily default fines. The Secretary of State also has the power to issue a direction requesting the company comply with the changes to the Companies Act.

The company may also find that Companies House takes action to remove the company from the register. If no natural director is appointed then the company may be deemed not to be in good standing. This could prevent the company from filing accounts and ultimately having difficulties operating. In addition any company that files accounts late may face penalties in accordance with the Companies Act.

The Companies Act 2006 now requires directors to provide more information for the register than was previously required under the old act. For further details please visit this link >>> details required for directors