The end of the corporate board?

It has always been possible to appoint a company as a director of another company incorporated and registered in England and Wales.  The Companies Act 2006, however,  heralded an end to the practice of the all corporate board. From 1 October 2008 all newly incorporated companies have been required to appoint at least one natural director (i.e. a real person). The rationale behind the new rule is to ensure that there is at least one individual who can be held responsible and accountable for a company’s actions.

Those companies registered before 1 October 2008 were given a period of time in which to appoint a natural director. The length of the grace period depended on when the company was incorporated. Most companies were required to appoint or re-appoint a natural director by 1 October 2008. Only companies incorporated before 8 November 2006 (the date on which the Companies Act 2006 received Royal Assent), which had a least one corporate director on that date and had not appointed any natural directors, were given until 1 October 2010 to make the appointment.

A company found to be in default of this rule may be subject to penalties for failure to comply. As the final deadline looms, companies that have not yet complied with the legislation, should now urgent take steps to do so to avoid being in default.