By Claire West
All limited companies must from the 1 October 2010 have at least one ‘human’ director, warns law firm Boodle Hatfield. The change in legislation will be of particular concern to companies with complex group structures.
The change was introduced with the Companies Act 2006 and came into force on 1 October 2008. However, under transitional arrangements any company which had only ‘corporate’ directors was given a period of grace to comply with the new rules. This grace period expires on 1 October 2010.
Victoria Symons, a partner in Boodle Hatfield’s Corporate team said: “Any business with a group company structure is likely to be affect by this. Many companies in, for example, the investment or property sectors typically have many special purpose vehicles (SPVs) created with the simplest structure possible with the SPV a wholly owned subsidiary of the larger group company. In these circumstances there may well be just the one ‘corporate’ director, and not a natural person.”
Companies are advised to check the status of subsidiaries and SPVs and appoint at least one new director who is a real person. Companies who fail to comply with the new regulations can be punished by a one-off fine not exceeding level 5 of the standard scale, currently standing at £5,000, plus a daily default fine until the matter is resolved.