Your Board of Directors is key to the success of your business. By providing a unique combination of specialised knowledge and expertise in key areas of business such as technology, finance, or management, they can help amplify your strengths and address any weaknesses within your organisation.
Given how important the Board of Directors is, you need to be thinking very carefully about who you hire onto your Board, who you choose to retain, and how you utilise their skills, connections, and experience.
What makes up a Board of Directors?
All private, limited companies are required to have a minimum of one director, while public limited companies must have a minimum of two.
Your Board of Directors needs to have at least one director who is a natural person – not another company.
Directors are responsible for ensuring that your business is in compliance with the law, and can be held individually liable in the event that your business is not compliant.
Others can also attend your board meetings, and it may be beneficial at times to include non-director employees at your board meetings.
Your company’s secretary, if there is one, serves as chief administrative officer. However, employees can have the word “director” in their professional title without being part of your Board of Directors. You no longer legally need to appoint a company secretary, but it may benefit your organisation to do so. In some organisations, the same people are both company secretary and company director.
What must Directors do?
Directors are responsible for ensuring that:
- The organisation produces annual accounts
- Accounts are approved by the Board
- Companies House receives key information
- Minutes are taken to record each Board meeting
- The company is in compliance with laws regarding health, safety, and employment
- Taxes, National Insurance, and VAT are paid on time
- The organisation is free of conflicts of interest or third-party benefits
Your Board should create a fair representation of your firm and its interests. Your Board needs to represent all business areas, have a clear understanding of its finances, and encompass diverse viewpoints to challenge your business and position it to make positive progress.
Next, you need to determine how many people will sit on the board. Over seven individuals can complicate the decision making process, and you may want to appoint non-executive directors as well.
Each Director also must be legally permitted to sit on the board. If a Director has been disqualified, a court will legally need to grant them permission to sit on the board again. Prospective Directors must be no younger than 16, and if a prospective Director for a public limited company is over the age of 70, they must have their appointment approved in a general meeting.