Sole director checklist

There are some specific things sole directors need to be aware of to ensure that their acts are valid and they do not incur personal liability.

All by myself

Having a sole director can work very well for lots of small companies. However, you will have to make sure that the company’s articles allow this and that there are not any technical hurdles in the way of decision making, e.g. the articles requiring a quorum of two directors for a valid board meeting.

Sole directors must be careful to distinguish between their acts on behalf of the board/company and as individuals. Signing documents for and on behalf of the company, for example, will help to avoid any confusion (not to mention potential claims for personal liability).

Sole directors should keep a record of their decisions with the company’s books, just as records of board resolutions are kept. See our Written Resolution of Sole Director.

What if the sole director is unable to act?

Shareholders have a residual power to step in in such a situation, e.g. to appoint a new director where the sole director resigns, dies or becomes incapacitated. However, some companies, especially those that choose to be run by a sole director in the long term, choose to make provision for this eventuality in the articles, so the company is not left in limbo.

Restrictions

As well as possible restrictions in the articles, the Companies Act 2006 does not allow a corporate director to be a sole director because every company must have at least one director who is an individual (in any case, corporate directors are due to be abolished). This is generally only of concern to group companies, where the holding company often acts as the director of its subsidiaries - this is permitted as long as each subsidiary also has an individual in office.

Public companies are legally required to have at least two directors.