Appointing a director (including a non-executive director)

Under UK law, there's no difference in approach for the appointment of an executive or a non-executive director. So you can use the same approach to appoint, or remove, each type.

Both must be entered on (and, as relevant, updated and/or removed from) the register of directors at Companies House.

Executive directors are those charged with the daily management of the business. They are also usually employees of the business too (providing them with the benefits that come with that status).

Non-executive directors typically play a far less hands-on role. They’re not employees of the company and thus don’t have any of the benefits or protections that come with that status. They tend to be involved in giving more specialist or niche support to the business from time to time. But they remain liable for the responsible running of the business and are usually entitled to see all aspects of the company's business, including its financial position.

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1. Agenda for the board

Proposing the appointment.

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2. A cross-check on your articles of association

To ensure that the board has the power to appoint another director without needing, for example, shareholder consent or revisions to the board's current authorities.

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3. A cross-check that the director does not have any conflicting interests

For example, relationships with competitors that might derail an appointment or require shareholder approval ahead of you being able to action it.

Article 7 of our template articles of association cover this off to some extent.

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4. Board resolution

Recording the outcome and any relevant details.

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5. A letter of consent from the director

Agreeing to accept the appointment.

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6. Form AP01

Officially recording the appointment on the register of directors at Companies House.

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Step 1: Check if you have the authority to make the appointment outright

First of all, check your company's articles to ensure that the board has the authority to make another appointment.

It's possible that you might need shareholder permission to make the appointment. If you need to get shareholder permission, you should be able to produce and circulate propose a written ordinary resolution to gain this consent.

Farillio's template articles of association permit directors to appoint another director shareholder without consent.

If you do need consent, our template proposed ordinary written shareholder resolution will help you with this – and the guide notes will talk you through the time frames and steps you'll need to take here.

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Step 2: Get it on the agenda

Assuming you have the authority you need, either add the proposed appointment to your next board meeting agenda, or create a separate one if you want to make the appointment ahead of the next board meeting.

Alternatively, you can simply agree to make the appointment in writing and without an actual board meeting being held.

If you prefer not to hold a meeting to discuss the appointment, you can simply circulate the board resolution in draft, request the agreement of the other directors, in writing, by return; and then once you have this, you can finalise the resolution.

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Step 3: Make sure you have the intended director's consent

A letter of consent from the intended director is needed. You can provide your intended director with Farillio's template letter for these purposes.

You should have met with the intended director first, to explain the role and what it entails. Directors who are appointed to the board of a company carry certain duties and liabilities, and you should check that your candidate is aware of these and is content to accept them.

Farillio's guide to directors and their duties and liabilities should help here too.

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Step 4: Fill in and file form AP01

Complete the Companies House Form AP01 with the detail of the new appointment.

You can file this via the online service – or on paper if you prefer.

Most people file online these days, and there's no fee to do so.

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Step 5: Update your internal register of directors

Every company must keep a register of directors. Every appointment and every termination of appointment needs to be recorded in this register, along with key details relating to that director.

The details required by law to be kept include:

• the director's full name
• any former names (including maiden names)
• an address for service (where official correspondence relating to the directorship for the company should be sent – often it's the company's registered address)
• the director's residential address
• the country where the director is usually resident
• the director's nationality
• the director's business occupation
• their date of birth

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Step 6: Don't forget the contract and supporting materials

Finally, you'll want to get the new director to sign their service contract. You can use Farillio's template director's service contract.

If they're new to the business, then to be legally compliant, you'll need to ensure that you've provided them with a copy of your employees, contractors and workers privacy notice informing them how you handle their personal data, your staff handbook containing all the policies and details of the various processes that your business applies to it daily operations and staff, and you'll probably already be on top of your plans to induct them and get them up and running as rapidly and smoothly as possible.

If they've been promoted from within your business, you may still want to set some performance targets or expectations around their transition into this new role.

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Step 7. Have a plan to communicate the appointment

You may want to have a communications plan (even if it's just a few carefully written sentences that you share on an email) to help you announce the promotion to other members of the team – ensuring as far as possible that your staff see the promotion as a positive development, so that any relevant reporting structures and the overall cultural integrity of your business is maintained.

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Step 8. Check whether you need to increase any insurance cover

Don't forget also to review whether you may need to increase your 'key person insurance' policy.

See our guide to financial planning 101 for more information about how valuable this particular cover can be when someone is stepping into a very key role within your business.

You may also need to review whether, given this new appointment, other insurance policies remain at appropriate premium levels as well – as some policies are calculated on the number of staff you have in your business.

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