What types of directors are there in a company?

There are several types of directors in a company, and if you’re setting up a limited company, knowing which ones you need (and which ones you don’t) is a solid place to start. 

In this guide, we’ll break down the different types of directors in a company, what they each do, and which type might be the right fit for your business. We’ll also cover:

Let’s dive in!

What does a company director do?

A limited company is a separate legal entity. That means it can own assets, earn income and pay tax, but it still needs someone to steer the ship. ⛵ 

That’s the director’s job. They’re responsible for running the company and making sure it meets all its legal obligations. In most small businesses, the founder is also the sole director. 

But if your business is growing, you might choose to appoint more than one. To figure out your structure, it helps to know the different types of directors in a company and what responsibilities come with each one.

So, what are the different types of directors?

When you’re registering your company with Companies House, you’ll need to name at least one director. However, it can be a bit confusing since there are several different roles to choose from. 🤯

To help you get to grips with things, we’re going to break down the most common types of directors in a company and what each one actually does.

Executive director

This is the hands-on one. 🧑‍💼 An executive director is usually involved in the day-to-day running of the business. If you’re the person actually doing the work, making decisions, and keeping things running smoothly, then you might want to consider an executive director position.

Non-executive director

A non-executive director (NED) isn’t involved in daily operations. Instead, they provide strategic advice and oversee operations, but typically don’t get involved in the company’s day-to-day activities. 

Managing director

This is typically the most senior executive director. They’re responsible for implementing company strategy and often serve as the public face of the business. It’s a job title more than a legal requirement, but it can help to clarify leadership roles.

Nominee director

A nominee director is appointed to act on behalf of someone else (like a shareholder or another company). They still have legal responsibilities and act in the best interests of the company, not just the person who nominated them.

Alternate director

This is a step-in role. 🔄 An alternate director temporarily steps in for another director who’s unable to fulfil their duties, like during an extended leave. They have the same powers and responsibilities as the director they step in for.

De facto director

A de facto director is someone who acts like a director (makes decisions, manages the company etc) without being formally appointed. HMRC and Companies House may still treat them as a director, even if they don’t have the official title.

Shadow director

A shadow director is trusted to advise the official directors without being in an official director role. Like de facto directors, shadow directors can still be held accountable under company law.

Chairperson

A chairperson leads the board of directors. 🪑They don’t usually get involved in day-to-day management either, but they are responsible for making sure board meetings are productive and that decisions are made fairly.

Which types of directors do I need?

If you’re starting a small business, all you legally need is one director – and that’s usually you! In this case, you might choose to be an executive director.

You don’t have to appoint a chairperson, managing director or NED, but as your company grows, bringing in other types of directors in a company can help you:

You might also want to assign job titles to clarify roles. For example, you could be the Managing Director, while your co-founder is the Finance Director.

Do you need to know all of this when getting set up?

Not really, especially if you’re a solo director running a small limited company. You’ll be listed as an executive director by default, so it’s not worth worrying about too much.

But it is good to know the ins and outs of different roles, especially if you’re thinking about expanding, taking on investors, or bringing in support later down the line.

Can you have more than one director?

Absolutely! Your company can have as many directors as you like. In fact, some companies appoint both executive and non-executive directors to keep a balance between strategy and operations.

What are a director’s legal responsibilities?

It’s not just a fancy title. Directors have legal duties under the Companies Act 2006. 💼 That includes:

How to appoint a new director

If you’re thinking about bringing someone new in alongside you, here’s how it works:

It’s that simple. Once you’ve completed these steps, the new director will be listed on the public register.

How to resign or remove a director

Directors can step down voluntarily, or be removed by the board or shareholders.

To resign, the director simply needs to:

• Inform the company in writing
• Submit form TM01 to Companies House

To remove a director, you’ll need to follow the procedure in your Articles of Association. This might involve a shareholder vote.

Final thoughts

Building a business is exciting stuff! 🥳 But figuring out your director structure? Not so much! Still, understanding the different types of directors in a company helps you stay organised, compliant and ready for whatever’s next.