Letter of appointment for a director

You should use this document if you are appointing a new director, to set out the terms and conditions of their appointment. You can also use this letter if you have already appointed a director and you want to clarify their terms and conditions retrospectively.

This Director’s letter of appointment covers a wide range of terms that are important for setting out the relationship between the director and the company. Examples of such terms are:

• allowing the company to deal with the director’s resignation if the director fails to cooperate;
• confirming that the relationship is not an employment relationship and bonuses and pensions will not be paid;
• setting out the director’s start and end dates;
• providing the ability for the company to terminate their directorship;
• setting out the director’s key responsibilities and obligations to the company (such as time required for preparing for board meetings and a requirement to obtain the board’s approval before taking on other commitments that might affect their role as director);
• providing for fees, expenses and insurance; and
• protecting the business’s confidential information and intellectual property.

You need this document to protect your business and to make sure that the directors and company are clear about the roles and responsibilities of a new director. Having the appropriate terms and conditions set out in writing helps to minimise the risk of disputes and/or legal claims being taken by the director against your business in future.

You can find further guidance on appointing directors at Directors’ agreements.