Choosing and appointing a company’s first directors

Choosing and appointing a company’s first directors

Who can be a director

Q1: Who can be a director of my company?

Anyone, as long as they are not:

  • under the age of 16;
  • disqualified from acting as a director (unless they have been granted special permission by the court);
  • an undischarged bankrupt (unless they have been granted special permission by the court); or
  • the company’s auditor.

Your company’s articles of association can set out further additional eligibility requirements, if you wish, although there are none further than the above if your company uses the model articles.

You should make sure that your chosen directors are aware of their powers and responsibilities (see Duties owed by directors). 

Q2: How many directors does my company need?

All private companies limited by shares must have at least one director. Many small companies only have a sole director. A Public Company and a Non-Profit Company must appoint at least three directors of unrelated backgrounds.

Your company’s articles can specify a minimum or maximum number of directors. If your company has the model articles there is a maximum number.

If your articles do not say anything about the maximum number of directors, there is no limit, although there are obvious practical problems with appointing a lot of directors.

Q3: Can another company be a director of my company?

Currently yes, as long as your company has at least one director who is a human being. However, the law on this is likely to change so that all directors must be human beings (with some limited exceptions). This does not apply to partnerships and trusts who are not able to appointed as directors. 

It is not yet known when this new rule will come into effect but you should bear in mind that if you choose to appoint a corporate director, then you are likely to have to change your arrangements when the law changes.

Q4: Can someone be a director of more than one company?

Generally speaking, yes. It is fairly common for people to have multiple directorships.

Anyone wishing to do this should check the articles, and any shareholders’ agreement, for each company in case there are restrictions on them holding multiple directorships. If the companies have the model articles, there are no such restrictions.

Directors should also make sure they can properly discharge their legal duties to each company, and be careful to avoid conflicts of interest. See Duties owed by directors and Directors’ conflicts of interest for what directors have to look out for and how to act if there is a conflict of interest.

Q5: Does a director of a RSA company have to live in the RSA?

No. There is no legal requirement for a director of a RSA company to be a RSA resident, as long as they are able to do the job properly.

However, it is possible that the residency or nationality of a director might affect the tax status of a company. Advice about this is beyond the scope of this service; if relevant you should speak to a specialist tax adviser.

Q6: Does a director of a RSA company have to be a RSA citizen?

No. There is no legal requirement for a director of a RSA company to be a RSA citizen, as long as they are able to do the job properly.

However, it is possible that the residency or nationality of a director might affect the tax status of a company. Advice about this is beyond the scope of this service; if relevant you should speak to a specialist tax adviser.

Q7: Does a director need to have qualifications?

You do not need any formal qualifications to be a director.

You should however bear in mind the responsibilities and obligations that directors have and be satisfied that the individual in question has the necessary skills and experience to fulfil these; see Duties owed by directors for further information.

Q8: Does a director also need to own shares in my company?

No (unless the company’s articles say otherwise) although a director will in practice often be a shareholder of their company.

If you have the model articles, they do not say that your directors need to be shareholders.

Q9: Will a director automatically become an employee of my company?

No. A director of your company does not need to be an employee. Indeed, there can be benefits to your business in at least one of your directors not being an employee.

A director who is not an employee is known as a non-executive director and will typically sign a letter of appointment with your company.

A director who is also an employee is known as an executive director and will typically enter into a service agreement with your company.

Before appointing anyone to the Board you should make sure your company and new director enter into an agreement so you are clear what terms apply. See Directors’ agreements.

How to appoint a company’s first directors

Q10: How do I appoint my company’s first directors?

You appoint your company’s first directors by including their details in your application to set up a company.

You must give each director’s name and certain personal details on the form, which include nationality, business occupation, date of birth and residential address. You must also confirm that you have obtained each individual’s consent to act as a director.

See Setting up a new company for detailed guidance on how to apply to set up a new company, and for all the documents you are likely to need for the job, see our Starting a company toolkit.

The new directors will automatically take office on the date that your company is incorporated. They do not need a contract or letter of appointment to start in their new role, although it is usually a good idea to have one so that the terms of their appointment and their responsibilities are clear. See Directors’ agreements and:

  • Director’s letter of appointment for a non-executive director; or
  • Director’s service agreement for an executive director.

Q11: How do I appoint additional directors or remove existing ones?

For what to do if you wish to appoint additional directors, see the guidance in Appointment of new directors.

For what to do if a director wishes to resign or you want to remove a director, see the guidance in Removal and resignation of directors.

Filing and record keeping for directors

Q12: What records of my company directors do I need to keep?

You are required to keep a register of directors (containing the same personal details as you entered in your application to register your company, other than residential addresses) and a register of directors’ residential addresses. For further guidance, see Keeping a register of directors.

Up-to-date registers must be kept at your company’s registered office, at a single alternative inspection location or on the CIPC central register. The register of directors is publicly available, but not the register of directors’ residential addresses.

For further information about how to set up and maintain the necessary registers, including template Company registers you can use, see Maintaining a company’s books and records.

Q13: What documents do I have to file at CIPC if an additional director is appointed?

Once you have appointed an additional director (see Q 11), you must notify CIPC within 14 days of the appointment.

For further guidance on the other steps you should take after a new director is appointed, see Steps to take after a new director’s appointment.

Q14: What documents do I need to file at CIPC if a director resigns or is replaced?

You must notify CIPC within 14 days. See Filing and record keepingafter a director leavesoffice for guidance on how to notify CIPC.