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Director

Also known as: Company Director, Board Member

Definition

A director is a person legally appointed to manage a limited company's day-to-day operations on behalf of shareholders, with personal responsibility for ensuring the company complies with UK law.

Understanding the director role is crucial for estate planning because while your company shares can pass through your will, your director position cannot—it's a management role, not an asset.

What Does Director Mean?

Under the Companies Act 2006, directors are appointed to manage limited companies on behalf of shareholders. Section 250 defines a director as anyone occupying the position of director, regardless of title. Directors are registered at Companies House and must be at least 16 years old. Every private company must have at least one director.

Directors run the company while shareholders own it—though the same person often holds both roles. Directors make day-to-day management decisions, file annual accounts at Companies House, and ensure legal compliance. You're classed as an "office holder" for tax purposes. Even if you hire accountants or solicitors, you remain personally responsible for company obligations. Sarah owns a marketing consultancy where she's both director (manages operations) and shareholder (owns the business).

The director-shareholder distinction is critical for estate planning. Your director position ends when you die—it doesn't pass through your will. However, your shares are assets that do pass through your will. If David dies as sole director-shareholder, his wife Emma inherits his shares but doesn't automatically become director. The company faces operational paralysis until Emma formally appoints a new director—a process that could take weeks.

Common Questions

"Can I be both a director and a shareholder of the same company?" Yes—this is extremely common in UK private limited companies. Directors manage the company while shareholders own it. Many business owners wear both hats.

"What happens to my company if I die as the sole director?" Your company may face serious disruption. While your shares pass through your will, the director role doesn't automatically transfer. Your executors must appoint a new director, but delays can freeze business operations.

"Do I need to include my directorship in my will?" You don't include the director role (it's a position, not an asset), but you should address company shares and succession planning. Your will specifies who inherits shares, while separate arrangements cover who takes over management.

Common Misconceptions

Myth: Directors own the company

Reality: Directors manage the company, but shareholders own it. A director can also be a shareholder, but these are legally distinct roles. Your director role won't pass through your will—only your shares will.

Myth: When a director dies, their spouse automatically takes over

Reality: No one automatically becomes director when a director dies. Directors must be formally appointed by shareholder vote. Even if your spouse inherits your shares, they don't automatically become director. Without proper planning, the company can be frozen for weeks.

  • Limited Company: The business structure requiring at least one director to manage it on behalf of shareholders.
  • Shareholder: The person who owns the company through shares—shareholders own while directors manage.
  • Company Shares: The ownership assets that pass through your will, distinct from the director role.
  • Business Succession Planning: The strategy for who takes over director roles, working alongside your will's provisions for shares.
  • Business Assets: Assets the company owns that directors manage on behalf of shareholders.

Need Help with Your Will?

If you're a company director, addressing both share inheritance and business succession in your will is essential for protecting your business and family.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.