Over the years, directors of companies have often abused their position of trust and authority resulting in large remuneration for themselves and damage to the good name of the company. In order to combat this, the government created new regulations (in the form of The Directors’ Remuneration Report Regulations 2002) to cover the payment of directors and to allow public scrutiny of them by requiring the issue of reports.
Further, Section 227 of The Companies Act 2006 and Section 188 of the Companies Act 2006 have put into place requirements that a “Directors Service Agreement” (also known as a Director Service Contract) be written to cover such things as the duties of the company’s directors, their rights and terms on how they will be paid. It is a requirement of company law that the properly drafted director service agreement is available to inspection under certain circumstances and that any agreement that would lead to a long term employment of a director be approved by the members (or shareholders) of the Company. These requirements are intended to ensure that both the company and the directors are protected respectively. The law has placed a number of requirements on directors including duties such as promoting the interests of the company at all times. These things should be covered by the Director Service Agreement, but even if such terms are omitted, they will still be required legally.
As the directors of a company are technically deemed to be employees, the director service agreement is seen as a contract of employment between the company and its directors. Therefore it is essential that it is all encompassing (as far as possible).
Directors Service Agreement – Our Service
The Company Warehouse has recognised the need for new companies to have this agreement in place and the complexities of drawing up a proper and legally correct agreement. Our experienced legal team have drafted a “Director Service Contract” template, which is available for purchase and designed to give you the help where you need it. Using this service will allow you to save time on research and drafting and give you peace of mind with regards to meeting your legal requirements.
If you are interested, please contact a member of our team on 0800 0828 727, to see what we can do for you.
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