DP has been given a promotion and made a Director at work - small Limited company

[sebsmummy1]

He has been offered a 'significant pay rise' and has gone from 'Head of' to 'Director of'. We have no idea at the moment the level of pay rise.

When I discussed it with my Father his immediate reaction was to ask me if the company was Limited or not, as if it's not Limited DP could be liable for any problems, debts etc. It is Limited and they have lifted some of the employees up to Directorship level after the COO left and they decided they didn't need to replace him. They have then brought in a few new people, one as a Director also, another few to be reporting to them.

I just want to check this is actually a good thing? I had a quick google this morning and it seems that Directors and small limited companies seem to go hand in hand and I see a lot of talk about dividends (I assume this is where the company is owned by the a Director and they are choosing dividends over a salary).

I just want to understand why they have chosen to structure the job titles in this way and to check it is actually good news and it's not going to bite our arse in some way later.

Thank you.

Just because his job title is director, it does not make him a director of the company at Companies House. Are you sure he is going onto the board?

I ask because it would be unusual for one board director (the COO) to leave and several more to come onto the board.

Dividends are for shareholders who may or may not be directors. The board will ultimately decide if it it prudent to pay shareholders a dividend.

There is a difference between directors and shareholders - the shareholders own the company, directors run it. Of course, directors may also be shareholders - which is often the case for small limited companies.

I honestly have no idea about whether he will be going onto the board. My instinct is to say no, as he made no mention of it. I know there is the company owner and then the CEO, the COO is not being replaced and there is now about four or five 'Heads of' that have now been promoted to Directors.

I shall double check with him when he crawls out of his pit.

If he is not going on the board then you have nothing additional to worry about with the Director title - he was "Head of Painting", he's now "Director of Painting" but could just as easily be "Vice President of Painting" or "Chief Painting Officer" - it's just a title.

Thanks Yonic. I did ask him if his job was changing at all and he said no, it was a title promotion and pay rise. I did wonder 'why have they bothered' but I guess people love important sounding job titles.

I'll double check about the board thing as obviously that then does sound like it comes with lots of positives and negatives (great if the company gets sold down the line for lots of money, bad if it goes kaput).

Yes, do check as Yonic is right - it might just be a title such as you might call yourself Director of Family Operations and Related Shit

Shareholders - own company, can take dividends if company is profitable
Directors - registered at Companies House as Directors. Have significant fiduciary duties. Please get your DH to check these out as penalties can be severe if the company is not run properly - eg: Trading whilst insolvent
'Director of Paperclips' - just a posh job title
I'm pretty sure you don't have to be a registered Director to participate in Board meetings but i could be wrong on that one.

So, check out if he is being asked to sign forms for Companies House and then google Responsibilities of Corporate Directors'

Thanks for your quick and detailed help. I will do exactly that as last night we were just two very happy puppies and this morning I'm thinking, hmmmm let's just make sure he's not walking into something bigger than he realises.

I will definitely google that Summer if he does say he will be on Companies House as a Director.

You can attend board meetings if you are not a formal director of the company but you cannot vote. You should also be careful not to act as a director.

If he is a board director, the company should have Directors' and Officers' insurance to cover him.

Thanks Yonic, much appreciated.

Very sensible Sebsmummy

People often are flattered by it and don't realise the very real responsibilities they are signing up for. However in a good company where he can act in that role and make a difference it can be a great thing.

I hope it all works out well for him

If he's in doubt he'll be able to check at companies house. You're supposed to sign a form but I was once made a director of a company without my knowledge. I only found out when I did a search on my name - I was a bit surprised to be honest - especially as the company was struck off!

We own and run a small business, and over the years have had several directors, although DH and I have remained the only shareholders.

Ok, just checked and he said it is a job title at this stage and nothing more. It is DP and a small selection of other people that have been there from the very small stages that are being promoted. With the exception
of a new guy who will come in at the same level.

So he thinks it will mean that he will have more clout re. His opinion but probably little more.

He is a lovely man who works bloody hard and is good at what he does. So I can now sit back and be very very pleased for him without worrying about it

It's nice that his hard work - together with that of his colleagues - has been recognised.