Removing or resigning a company director in the UK requires following a formal legal process set by the Companies Act 2006 and notifying Companies House using specific forms. For small founder teams this decision can affect control, signing authority and day-to-day operations, so it must be handled correctly to avoid disputes or filing errors.
Whether a director wishes to leave voluntarily or the remaining founders need to remove someone, the steps involve board or shareholder resolutions, updating company records and filing the right paperwork within strict deadlines. This article explains the practical actions UK early-stage founders and e-commerce sellers should take.
Understanding the difference between resignation and removal
A director can resign voluntarily by giving notice to the company in writing. This is usually the cleanest route when the individual agrees to step down. Removal, by contrast, occurs when the other directors or shareholders decide the person should leave against their wishes. The company’s articles of association and any shareholders’ agreement often set out the exact procedure that must be followed.
For small teams of two or three founders, removal can quickly become contentious. It is wise to review the articles first to confirm the required majority vote and notice periods. If the articles are silent, the default rules in the Companies Act apply. Always keep records of meetings and resolutions because these may be requested later by Companies House or in any dispute.
Resignation process: step-by-step
The resigning director should send a formal letter or email to the company’s registered office or the other directors stating the resignation date. Once accepted, the company must update its internal register of directors within 14 days. The key form to file at Companies House is TM01 – Termination of appointment of director. This must normally be filed within 14 days of the resignation taking effect.
After filing, Companies House updates the public record. The former director should check that their name is removed from the company’s profile. The company should also notify its bank, suppliers, landlord and any other parties who held the director’s details for signing authority. Practical example: an e-commerce founder who wants to focus on product development might resign from the director role but remain a shareholder; the TM01 filing ensures the public record matches the new operational split.
Finally, the company should consider updating its website, email signatures and any contracts that listed the resigned director as an authorised signatory.
Removing a director: legal requirements and forms
Removal usually requires a shareholder resolution. The company must give the director concerned special notice of the meeting, typically 28 days, so they can prepare representations. The resolution must be passed according to the voting rights in the articles – often a simple majority of shareholders, but check your specific documents.
Once the resolution is passed, file form TM01 at Companies House within 14 days. The company must also update its register of directors and secretaries immediately. Minutes of the meeting recording the resolution should be kept with the company’s statutory books. In very small teams where the director also holds a large shareholding, removal may trigger other rights under a shareholders’ agreement, so review that document before starting the process.
Practical tip: send all notices by recorded delivery or tracked email with read receipts to create an audit trail. This helps protect the remaining founders if the removed director later challenges the validity of the process.
Notifications and updates after the change
Beyond Companies House, several practical notifications are required. Banks will ask for a board resolution and updated mandate form to remove the director’s signing rights. If the company uses a registered office service or accountant, inform them so correspondence is routed correctly. Insurance policies, especially directors’ and officers’ liability cover, should be reviewed because the policy may need amending.
For e-commerce sellers, notify major platforms if the director was the named account holder. HMRC should be told if the change affects PAYE or VAT responsibilities, although the company’s registered details remain the same. The company must keep its internal statutory registers up to date at the registered office or with its company secretary or accountant.
Shareholders should also receive formal confirmation of the change so everyone understands the new authority structure. In founder teams this prevents confusion over who can sign contracts or authorise spending.
Implications for small founder teams
In a two-founder limited company, losing one director can leave the remaining founder with full control but also full responsibility. The company may need to appoint a new director quickly to maintain balance or meet bank requirements. If the departing director holds shares, their resignation does not automatically transfer those shares; a separate share transfer process is needed if ownership must change.
Disagreements during removal can damage supplier relationships or staff morale. Remaining founders should prepare a short statement explaining the change without breaching confidentiality. For e-commerce startups, continuity of operations is critical – ensure the removal does not interrupt access to payment gateways, advertising accounts or fulfilment partners.
Consider updating contracts, terms of service and privacy policies if they reference specific directors. The remaining team should also review their own director duties under the Companies Act to avoid future disputes.
Common pitfalls and how to avoid them
Filing TM01 late is one of the most frequent errors and can result in automatic penalties or director disqualification risks. Always file within the 14-day window. Another mistake is failing to follow the exact procedure in the articles, which can make the removal invalid and expose the company to legal challenge.
Do not assume verbal agreement is enough; everything must be documented. Small teams sometimes forget to update the company’s PSC (persons with significant control) register if the change affects ownership notifications. Finally, check that all company letterheads, websites and email footers are revised so former directors are not held out as current officers.
Practical example: a Kirklees-based e-commerce founder who resigned omitted to file TM01 promptly; the public record continued to show them as a director for months, causing confusion with a new supplier. Timely filing prevents such issues.
When to seek professional help
While the basic process is straightforward, complex situations involving shareholder disputes, unequal shareholdings or linked employment contracts benefit from professional advice. An accountant or solicitor familiar with UK company law can draft resolutions, review articles and ensure all filings are correct. Costs vary so obtain quotes before instructing.
Free resources on GOV.UK, Companies House and HMRC explain the forms and deadlines. Many early-stage founders also use online company secretarial platforms that guide users through the TM01 process and generate the necessary resolutions. For teams at Loomworks in Liversedge, the operator mentoring available can provide additional practical guidance on handling these changes smoothly.
Frequently asked questions
Can a director resign without the agreement of other directors?
Yes. A director can usually resign by giving written notice to the company. The resignation takes effect on the date stated in the notice or when the company acknowledges it. The company must still file form TM01 at Companies House within 14 days. Check the articles of association for any specific notice requirements.
What form do I file to remove a director from Companies House?
Use form TM01 – Termination of appointment of director. It must be filed within 14 days of the director’s resignation or removal. The company’s register of directors must also be updated on the same day the change takes effect.
Does removing a director automatically remove their shares?
No. Directorship and share ownership are separate. Removing someone as a director does not change their shareholding unless a separate share transfer agreement is completed and the company files the correct share transfer forms.
How long does the removal process usually take?
If the director agrees to resign, the process can be completed in a few days once the TM01 is filed. If removal is contested, the statutory notice period is usually 28 days before a shareholder meeting, plus time to prepare paperwork.
Do I need to tell HMRC when a director resigns?
You should inform HMRC if the change affects PAYE, National Insurance or the director’s personal tax situation. The company’s corporation tax registration stays the same. Always check current GOV.UK guidance because requirements can change.
Related reading: How to Appoint a New Director to Your UK Company, Essential Contracts Every UK Startup Should Have, How to Write Terms and Conditions for Your E-commerce Store. Browse all company admin & legal guides or apply to Loomworks.