Sole Directors – Matters to Consider

Many companies in the UK companies register are owner managed businesses. This means that the shareholders are also the directors. Many of these are run as sole director companies.

The two recent High Court Cases of Re Fore Fitness Investments Holdings Ltd (Hashmi v Lorimer-Wing) and Re Active Wear Limited, have both considered the interaction between the provisions in the model articles as they relate to sole director companies. Each case has unhelpfully led to a different conclusion on the question of whether sole directors with unamended model articles can make decisions on their own. Each of these judgments is significant and pending further clarification, sole director companies need to consider the decisions they make carefully and whether they may need to ratify any previous decisions they have made, particularly where the company historically had more than one director.

We have guidance and templates to assist sole directors here and have this month supplemented this with some useful new information pages on sole directors. The information pages include information on:

• the number of directors companies need to have;
• the governance of sole director companies;
• sole directors and board minutes;
• sole director decision making and company constitution; 
• the role of sole directors; and
• death or resignation of sole directors.

It is always recommended to seek independent legal advice before making any changes to a company's constitution.