1. Identify the need for a new director
The Board or a nominated subcommittee must define the gap that needs to be filled by a new company director. For example, a director may have recently resigned, or the company’s strategy may require new skills and talent at the top level of the organisation. To ensure the right selection is made, it is best practice to draw up a profile of the type of person you are looking for and the abilities, education, and experience they need to possess.
2. Draft a director’s service contract
- your company name
- the director’s name and employment start date(s)
- the notice period is required to end the appointment
- details of the director’s statutory and other duties
- information regarding remuneration, including when the package will be reviewed
- details of any commission or profit-sharing arrangements
- if the director’s position is terminated before the end of the contract, what (if any) compensation will be paid?
Who appoints directors?
Generally, directors are appointed by the shareholders at the Annual General Meeting (AGM), or in utmost circumstances, at an Extraordinary General Meeting (EGM).
How many directors are needed for a company?
Limited companies must have at least one director. If a limited company has only one director, he or she must be a human person - it cannot be another company. However, public limited companies (or "plc") must have at least two directors.
When appointing a new director it is always worth investing in legal advice to ensure the process you adopt complies with legislation and the company’s Articles.
You can get legal assistance from LawBite
When you appoint directors from a company, there are legal formalities that must be followed to ensure that the appointment is valid. LawBite has expert lawyers who will be able to help you.
Book a free 15-minute consultation to discuss your legal issues.