How does a director leave a limited company?

There are many reasons why a director may need to resign from a limited company. In some cases, they may be asked to resign following a dispute with the company’s other directors or shareholders. Alternatively, it may be the director’s own decision.

Whatever the reason, there are a number of steps that must be taken in order to leave.

Why would a director leave a limited company?

Firstly, why might a director need to leave their position? There are many reasons why a director might need to leave a limited company, including:

  • Retirement
  • Ill health
  • Moving to a new job
  • Disagreement with other directors or shareholders
  • Death
  • Company takeover
  • Removal from office
  • Disqualification
  • Relocation

How to resign as a director

Notify your company

The first thing you’ll need to do to resign, is to notify the company that you are going to leave. Although not compulsory, it’s advisable to hold a meeting to discuss your resignation.

Get A Free Quote

We believe in working with our clients to make accountancy services easy. Get year-end accounts, CT600 corporation tax, payroll, bookkeeping and management accounts made easy.

This will allow them to start the process of taking on a new director, if needed. Even if you speak to the other directors and shareholders informally, you should also inform them in writing, so that there is a formal document to reference your resignation.

If your resignation will also impact other members of staff, clients, and customers, you should also let them know that you’ll be resigning.

File a TM01 form

The next step is to file a TM01 form with Companies House. This can be submitted online, or by printing out the necessary forms and posting them off to Companies House.

The TM01 is submitted on behalf of the company, rather than the individual. If you submit the form on your own behalf, then it might be rejected.

Once you’ve resigned, you will no longer be a director, and will no longer have any responsibilities in connected to the company. However, it’s important to remember that, on the other hand, you also won’t have any involvement in the company or any say in how it is run.

What happens when a director resigns from a limited company?

Once a director has resigned from a limited company, they are no longer liable for any decisions made following their resignation. However, in rare cases, some directors continue to assist in decision making as a shadow director.

Can shareholders remove a director?

Yes, it is possible for shareholders to remove a director, and this is usually implemented through a majority vote. For example, in most cases, the board of directors or the majority of the shareholders under the company’s articles of association, are left to make the decision. All share holder agreements must be checked first.

What are the options if a departing director agrees to sell shares?

Once a director leaves a company and agrees to sell their shares, there’s a number of different ways that they can be acquired. And as a general rule of thumb, a director should not resign until an agreement surrounding their shares and what will happen to their shares is reached.

These are the options a departing director has when it comes to selling their shares:

  • The shares can be transferred to existing shareholders. However, you should be aware that this could result in shareholder control moving in an unintended direction.
  • A company can also be re-structured and the shares can then be divided up into new groups using existing shares.
  • Many companies choose to buys back the shares to ensure that shareholder control remains in place, with limited changes.
  • An employee benefit trust could be set up. This is where the employer purchases the shares and hold them for other employees to benefit from them.

How to change a director’s details at Companies House?

Changing a director’s details on companies house is relatively quick and easy. For example, you can change any details that have been registered at Companies House using form CH01, apart from a director’s DOB. It then takes around 48 hours for Companies House to  update these details on the public register.

Why choose React Accountancy?

Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.

All of our team has years of experience in providing accountancy services that support your business including complex financial issues.

If you’re a director thinking about leaving your limited company, or you need advice on how to go about replacing a director, please get in touch. Call us on 0191 4324110 or email us at:

Get A Free Quote

We believe in working with our clients to make accountancy services easy. Get year-end accounts, CT600 corporation tax, payroll, bookkeeping and management accounts made easy.