To what extent are other Company Secretaries concerned about the consequences of the word ‘director’ appearing in a job title when that person is not actually a legal director of the company e.g. IT director, XYZ plc.
Is the potential exposure of being held out as a legal director sufficiently compelling to warrant corrective action such as i) changing the job title to Director of IT, Chief IT Officer or similar or ii) adding a comment to business cards, email footers etc to clarify that the person is not a legal director?
Conversely, it may be that companies feel no action is required since the identities of the legal directors can be verified very easily.
Details of any solutions or that no solution was deemed necessary will be welcomed.
Yes some of our people have ‘director’ in their title when not legal directors. Historically we had a separate management company of which these people were legal directors. But we have stopped that practice and rely on sound internal controls. Agree with the comment to beware of individuals who sign for plc rather than the subsidiary limited company which they have delegated authorities for.
We have quite a number of people who have ‘director’ in their title. I agree with the previous response that it is more about ensuring internal controls are robust and well understood. Particularly in respect of what people can sign on behalf of the company.
We have a number of titled directors who are not legal directors – having run through this with our corporate lawyers some years ago, we have no concerns in this regard. Ensure that your delegated authorities are drafted and communicated such that each non-legal director is fully aware of what they are able to commit the company to and when they need to seek additional authority – either due to the amounts involved or the nature of the obligation. In theory, a third party can rely on an employee committing the company when they sign “on behalf of x plc/ltd” so this is a bigger issue around internal controls rather than just titles
I think the risk is largely theoretical, but perhaps heightened if the business is leveraged. The issue is only ever likely to be considered in the event of an insolvency, and its more of an issue for the individual than the company. I have worked in 4 plcs where individuals have carried the title of “director” without being legally so, including in a plc that went into administration, without any concern being voiced.