Directors’ Service Contracts

Whilst not every director will have a written service contract (although it is a good idea for it to be in writing), the Companies Act 2006 imposes certain legal obligations in relation to the employment of directors particularly when employed on a long-term service contract. To complement our suite of template directors’ service contracts, additional templates, that may be used by companies to assist in the employment of directors, have been added.

In most cases, a director’s service agreement will have to be approved by the board and contracts for periods of more than two years require shareholders’ approval by ordinary resolution (as well as an accompanying memorandum of terms). In addition, a director’s service agreement must be kept at the registered office or SAIL and open to inspection by the members and if there is no written service contract, a written memorandum of terms must exist, clearly stating the services and duties of the director.

The templates added include:

• A letter to members regarding a director’s proposed long-term service contract;
• Shareholders’ written ordinary resolution to approve a director’s long-term service agreement;
• Memorandum to approve a director’s long-term service contract;
• A letter to members regarding a written memorandum of terms for a director’s service contract;
• Memorandum of terms of a director’s service contract; and
• A letter to members regarding the location of a director’s service contract.

These templates are designed for private limited companies employing directors either with or without a written service agreement.