A "director" in the UK is a member of a company's board, which is responsible for the key decision making and direction setting within the business. A director does not have to be based in the UK, however, an individual being appointed as a director must be 16 or over and not be disqualified from being a director. There are statutory duties on all director which they owe to the company, including a duty to act within their powers, a duty to promote the success of the company and a duty to exercise reasonable care, skill and diligence.
In the UK, it is common to distinguish between an executive director and non-executive director. Although their roles are different, their legal obligations are the same. An executive director is responsible for the day-to-day management of a company and is usually an employee of such company. A non-executive director is usually not an employee nor involved in the day-to-day operations of a company and is commonly an independent advisor or appointed by an investor.
A company must have at least one director and it is common for a company to include a provision in its articles which specifies a maximum number of directors that can be appointed to its board. As board decisions made at a meeting are decided by a majority (unless the articles of association or shareholders' agreement contain a provision providing otherwise), it may be preferable for a company to have an odd number of directors to avoid potential deadlock, although boards should largely act by consensus in all matters.
In the eleventh instalment of our UK Founder Series, we have outlined the key considerations of the role of a director and the ways in which a director can mitigate the risk of breaching their duties.
Learn More: UK Founder Series: Complying with Directors’ Duties Under English Law