Directors Agreement Template for England and Wales

A Directors Agreement is a comprehensive legal contract that formalises the relationship between a company and its directors under England and Wales law. This document serves as the primary framework governing the appointment, duties, compensation, and termination of directors, ensuring compliance with statutory obligations while protecting both parties' interests.

When do you need this document?

You need a Directors Agreement whenever appointing a new director to your company's board, whether for executive or non-executive positions. This includes situations where existing employees are promoted to director roles, external candidates are recruited to the board, or when restructuring corporate governance arrangements. Listed companies particularly require these agreements to demonstrate compliance with the Corporate Governance Code and ensure transparency in director appointments. The document is also essential when appointing directors to subsidiary companies or when establishing clear reporting relationships between parent and subsidiary company directors.

Key legal considerations

The agreement must clearly define the director's statutory duties under sections 171-177 of the Companies Act 2006, including the duty to promote the company's success, exercise independent judgement, and avoid conflicts of interest. Remuneration clauses should specify salary, benefits, pension contributions, and any performance-related payments, ensuring compliance with disclosure requirements for listed companies. Confidentiality provisions must protect sensitive business information both during and after the director's tenure. Termination clauses should address notice periods, circumstances for removal, and post-termination restrictions, particularly important when the director is also an employee under the Employment Rights Act 1996. For regulated sectors, additional compliance requirements under the Financial Services and Markets Act 2000 must be incorporated.

Legal requirements in England and Wales

Under the Companies Act 2006, companies must maintain a register of directors and notify Companies House of any appointments within 14 days. The agreement must comply with the director's statutory duties and cannot exclude or limit liability for breaches of these duties. For listed companies, the Corporate Governance Code requires specific provisions regarding board composition, independence criteria, and performance evaluation processes. Employment law considerations apply when directors are also employees, requiring compliance with the Employment Rights Act 1996 regarding notice periods, unfair dismissal protections, and pension auto-enrolment obligations. The agreement must also incorporate equality and non-discrimination provisions under the Equality Act 2010, and for companies processing personal data, directors must understand their responsibilities under the Data Protection Act 2018.