“I have a criminal record – can I still be a limited company director?”
The short answer is yes, unless you have received an official director’s disqualification order. Certain companies may conduct their own background checks on people or have specific rules on the subject, but UK law only prohibits those on the Disqualified Directors Register.
The minimum legal requirement for a private limited company is to have one director and two for a public limited company. The law also states that each one of the directors is a “natural person” or in other words a person and not another company.
The Appointment of Directors with Criminal Records in the UK
In the United Kingdom, the appointment of directors with criminal records is generally permissible, but there are some important caveats and restrictions to consider.
The Companies Act 2006 does not explicitly prohibit individuals with criminal records from serving as company directors. However, the Company Directors Disqualification Act 1986 sets out specific grounds for disqualification, such as fraudulent trading and other types of misconduct. A criminal record is not automatically grounds for disqualification under this Act.
However, specific industries may have their own regulations that prevent individuals with criminal records from serving as directors. For example, financial institutions regulated by the Financial Conduct Authority (FCA) are subject to stringent “fit and proper” tests that may disqualify individuals with certain types of criminal records from holding directorial positions.
Additionally, certain contracts and tenders may require company directors to undergo background checks, and those with criminal records may be excluded. Businesses may also have their own internal policies that restrict the appointment of directors based on criminal records, although these policies must be reasonable and justifiable to comply with the Equality Act 2010.
Failure to comply with these laws and industry-specific regulations could result in penalties, such as fines and disqualification from directorship.
Here are some additional things to keep in mind:
The nature and severity of the criminal record will be relevant to whether or not an individual is considered fit to serve as a director.
The individual’s role and responsibilities as a director will also be considered.
The type of company involved is also a factor. For example, public companies may have more stringent requirements than private companies.
What Makes a Good Director?
Directors can authorise transactions and enter into contracts on behalf of the company. Therefore, they must be honest and trustworthy as they are ultimately responsible for the actions of the company and will be liable for any offences that they cause the company to commit.
The way in which directors are chosen and appointed can vary from company to company. However, the procedure is outlined in the company’s constitution or Articles of Association. Companies House keeps a record of each company and when a new director is appointed, it should be notified using the Appoint a Director (AP01) form.
Let’s consider some of the most important skills to be a director:
knows when to delegate
recruits effectively
understands risks
understands the business sector
good business acumen
Decisive
sees the bigger picture
customer focus
motivates and inspires staff
demonstrates confidence as a spokesperson for the company
leads by example
Having a Criminal Record
Under The Company Directors Disqualification Act 1986 a director is classed as either “fit” or “unfit” to act as a director of a company. The definition of a “fit” director doesn’t exist, that said, there is a list of factors defining “unfitness”. Individuals who are not regarded “unfit” under these pointers are by definition “fit” to act again as a director in future companies.
Having a criminal record shouldn’t prevent individuals from becoming a director of a company. The AP01 form that needs to be filed at Companies House makes no reference to criminal convictions. However, there may be certain factors that prevent individuals from becoming directors, for instance, if they are on The Disqualified Directors Register because they’ve been banned by the Courts from being a director or have been bankrupt.
Recruiting Directors
The directors of a company make up the Board, and other persons may be invited to attend board meetings to achieve a good balance. A Board should always contain individuals with extensive hands-on business experience who can look at the company’s problems and goals with a strategic eye. It’s also wise to have directors who have a list of contacts and the sector-specific knowledge specific. Importantly, the Board should look credible to outsiders. In this way, the company will be taken more seriously by potential investors, future management candidates as well as business partners.
Previously disqualified directors and are not allowed to hold the position again unless a Court grants them permission. In a public limited company, directors over the age of 70 must have their appointment approved at a company general meeting. Finally, all directors must be at least 16 years old
If you would like to know more about your duties and responsibilities as a company director or are unsure whether you are legally allowed to carry out the role of director or to sit on a Board, please call 0800 074 6757 or email info@companydebt.com for free and confidential advice from one of our professional advisers.
