Halvorsen & Reith

Board composition and director requirements across 40 jurisdictions

Board composition and director requirements cross-border rarely come down to a single test. A holding company with directors sitting in three countries, a subsidiary board with one corporate director and two natural persons, a group that has never checked whether its structure still meets the standard its own register applies today - each raises the same underlying question in a different form. The rules on who may sit on a board, how many directors are required, and what has to be filed when a director changes are set jurisdiction by jurisdiction, and they rarely align even between two countries that share a legal tradition.

A UK parent appoints its finance director to the board of its Cayman subsidiary without checking whether Cayman treats a corporate appointment differently from a natural person appointment, or whether the register entry needs updating within a set window. Six months later a lender's due diligence team asks for the minute book and finds the appointment was never filed. The company is still validly managed. The register, for the time being, says otherwise.

What follows sets out the axis on which board requirements diverge across the jurisdictions this practice covers, and how a group identifies which axis applies to its own structure before that gap becomes a filing problem rather than a paperwork one.

What this practice covers, and where it stops

The Board Structure practice advises on how a board is composed, how directors are appointed and removed, what a constitution requires of the board, and what has to be filed when any of that changes. It covers the review and drafting of director appointment terms, the governance conditions attached to financing and to corporate transactions, and the exposure a director carries once appointed and for as long as the appointment stands. It does not cover employee tax residence, payroll administration, or the drafting of commercial contracts that have nothing to do with board authority.

The advice stops at a defined boundary, and the boundary is a licensing one, not a preference. The practice does not supply, appoint, source or arrange a director, a company secretary, a nominee shareholder or a trustee for a client structure, and it holds no licence that would permit it to. Where a structure needs a person to fill one of those roles, the work is to identify the requirement precisely and set the criteria the appointment has to meet; finding and installing that person is a separate, regulated activity that sits outside this practice and outside this firm. Nor does the practice suggest that a beneficial owner's identity can be kept off a register. Where a jurisdiction requires disclosure, the role here is to establish what has to be disclosed, to whom, and by when - not to imply that disclosure is avoidable.

A structured review of an existing board - checking composition, appointment terms and filing history against what the register currently requires - is described on the board composition review page. That page sets out the deliverables; this page sets out why the answer differs by jurisdiction in the first place.

The axis on which jurisdictions differ

Talk of "board requirements" as though it were one variable misses the point. At least four separate questions are being asked, and jurisdictions answer them independently of each other. Does the register require a director resident in the jurisdiction, or is residence irrelevant to the register and relevant only to a separate tax test? May a corporate entity itself act as a director, or must every director be a natural person? Is board composition visible on a public register, or does it sit in a filing that only specified parties can inspect? Is acting as a director for reward, or arranging for someone else to do so, a regulated activity in that jurisdiction, and does that regulation catch advisers who never intended to be caught by it?

None of these four questions tracks the others. A jurisdiction with no residency requirement can still run one of the strictest licensing regimes over who may act as director for a fee. A jurisdiction that permits corporate directors freely can still require full public disclosure of who sits behind them. Whether a corporate entity may itself act as a director, rather than a natural person, is one of the sharper divides; a side-by-side comparison of where a corporate director is still permitted shows how differently the question is answered even among jurisdictions that share a common-law foundation and, on paper, similar drafting conventions.

The practical consequence is that a group cannot transplant a governance template from one jurisdiction to another and assume it clears the bar. A board structure that satisfies England & Wales tells a reader almost nothing about whether the same structure satisfies the Cayman Islands, the UAE, or a jurisdiction further down the group's chain that nobody has looked at closely since incorporation.

Board composition and director requirements, cross-border

At the level of the board of directors itself, the variables that recur across jurisdictions are the minimum number required, whether a sole director is permitted, whether that director may be a corporate entity, and what evidence of eligibility the register or the constitution demands before an appointment is accepted. Some jurisdictions ask almost nothing of the register beyond a name; others require confirmation of capacity, absence of disqualification, and a signed consent to act before the appointment is effective.

The director appointment itself is usually the least examined document in a group's records, and it is usually the most consequential. Director appointment terms set the scope of authority, the basis for indemnity, the term of office, and the circumstances in which the appointment ends automatically rather than by resignation. A board resolution recording the appointment is not a formality that can be reconstructed later from memory; if it was never passed, or never minuted, the appointment's validity is open to challenge at precisely the moment - a financing, a disposal, a dispute - when validity matters most.

Whether the board itself can meet validly by video, rather than in person, is a related question that turns on the jurisdiction's own quorum rule and its own definition of where a meeting is held. The position is addressed specifically on the page covering whether board meetings can be held by video, and the answer is not uniform even between jurisdictions that otherwise share very similar constitutional drafting.

Records, registers and what becomes public

Every jurisdiction in this practice's scope requires some record of board composition. What differs is where that record sits, who can see it, and how the entry there interacts with the internal minute book the company itself keeps. A jurisdiction may treat the public register entry as conclusive for third parties even where the internal record tells a different story; another may treat the register as merely evidential, with the constitution and the minute book controlling the true position between the company and its own directors.

The statutory filing obligation that follows a change of director is where most gaps actually surface. A change becomes fixed for register purposes on the date the filing is accepted, not the date the company resolved it internally, and most jurisdictions allow only a short window to notify the change once it has happened. Once that window runs, the company is exposed to a filing default that sits on the public record and stays there until it is corrected, not until someone explains why it happened. A group that treats the internal board resolution as the end of the process, rather than the start of a filing clock, is the group that finds this out during due diligence rather than before it.

None of this requires naming a specific statute or a specific number to be understood correctly. What it requires is confirming, jurisdiction by jurisdiction, which register is authoritative, what the filing window actually is in that jurisdiction, and who inside the group is responsible for watching it.

Substance and where decisions are actually taken

Board composition and tax substance are separate questions that get treated as one question far too often. Where a board is required to sit, and where a board actually sits when it makes its decisions, are not the same thing, and a structure can satisfy the first without satisfying the second. The concept usually described as the place of effective management, or the location of central management and control, looks at where decisions are genuinely taken - which board meeting minutes, whose email trail, whose calendar - not at where the register says the company is registered.

This practice advises on the governance side of that question: whether the board is properly constituted to take the decisions the constitution requires of it, and whether the record of those decisions would survive scrutiny. It does not advise on the tax consequences of substance being found in the wrong place; that sits with a separate discipline, and a group facing both questions at once should expect to need both kinds of advice, not one covering both.

A board that exists on paper but never actually convenes, or convenes but defers every substantive decision to a parent's management team, is the pattern that tends to unravel both questions at once. Fixing the paperwork without changing the practice fixes nothing.

Constitutional documents and shareholder arrangements

A jurisdiction's default company law sets a floor. The constitution - the articles, or their local equivalent - is usually where the real governance rules are set, and it is usually where board composition and shareholder control interact most directly. A constitution can require board consent before a share transfer is registered, require a supermajority of the board for specified decisions, or entrench a shareholder's right to appoint a fixed number of directors regardless of shareholding percentage.

Whether the constitution can require board consent before a transfer is registered is answered specifically for one jurisdiction on the page covering whether articles restrict share transfers in the British Virgin Islands, and the underlying logic - that a constitution can go further than the default statute, in either direction, unless the statute expressly forbids it - recurs across most of the jurisdictions in this practice's scope, even where the specific mechanics differ.

A board resolution approving a transfer that the constitution required and never received is not a curable oversight discovered after the fact. It is a defect in the transfer itself, and unwinding it is materially harder than approving it correctly would have been.

Transactions and the governance conditions attached to them

Financing agreements, share purchase agreements and intra-group reorganisations all attach conditions to the state of a company's board. A lender's conditions precedent will typically require a certificate confirming the board is validly constituted, that each director's appointment is properly recorded, and that any consent the constitution requires has been obtained. A buyer's warranties will ask the same questions in different language, and a disclosure schedule that gets this wrong is a disclosure schedule that creates a warranty claim rather than avoiding one.

A financing agreement that makes drawdown conditional on evidence of a validly constituted board sets its own clock running from signing, not from the drawdown date itself. The certificate has to be dated before drawdown, and once that date passes without it in hand, the condition does not simply wait to be satisfied later - it closes off drawdown until the certificate is refreshed, and refreshing it can itself take longer than the parties assumed when they agreed the timetable. A group that treats the board certificate as a formality to be produced on request, rather than a document that has to exist correctly before the transaction clock starts, is the group most likely to miss it.

The governance conditions attached to a transaction are, in effect, a second audit of the board's own paperwork, conducted by a counterparty with every incentive to find the gap the company missed.

Duties, liability and disputes

Director duties are not a uniform export from one legal tradition. The core obligations - to act in the company's interest, to avoid conflicts, to exercise reasonable care - recur widely, but their precise content, the standard of care applied, and the remedies available for breach differ by jurisdiction in ways that matter once a dispute actually arises. A director's exposure also does not stop at the boundary of a formal appointment.

The concept usually described as a shadow director - someone treated as a director because the board is accustomed to act on that person's instructions, without that person ever being formally appointed - is recognised unevenly across the jurisdictions in scope. A comparison of where shadow directors are recognised sets out the divide, and it matters most to parent companies whose senior management routinely instructs a subsidiary board without sitting on it. Personal liability in that setting attaches to the person giving the instructions, not only to the person who signed the appointment form, and it attaches whether or not either of them thought of the relationship in those terms.

Disputes over board composition tend to surface years after the decision that caused them, at the point where a claim, a financing, or a regulator's inquiry needs the governance record to hold up. A minute book that was never kept current is the single most common reason it does not.

How to identify which of the above applies to your structure

The axis that applies to any given entity is a function of where it is incorporated, who its directors are, what the constitution says, and what the entity actually does. None of that can be assumed from the jurisdiction's general reputation. A group working through its own structure should be checking, entity by entity:

A group carrying more than a handful of entities across more than a handful of jurisdictions will not answer this from memory, and treating the exercise as a one-off tidy-up rather than a standing discipline is how the same gap reopens at the next reorganisation.

A board whose appointment terms have not been looked at since incorporation is not necessarily defective, but nobody currently knows either way, and that is itself the exposure a lender, a buyer or a regulator will eventually test.

Review your appointment terms

Write to info@hreithlaw.com with the jurisdiction and the structure.

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Frequently asked questions

What happens if board composition is never reviewed after incorporation?
Nothing happens immediately, which is precisely why the gap tends to persist. The exposure surfaces later, usually when a counterparty, a lender or a regulator asks for the board's paperwork and the register entry, the constitution and the minute book do not all tell the same story.
How often should a group check that its board still meets the local requirement?
There is no universal interval, because the trigger is not a calendar date but an event: a change of director, a financing, a restructuring, or a jurisdiction changing its own rules. A group should check on each of those events, and treat a period of several years with no check at all as itself a signal to look.
Does the requirement change once a company becomes majority foreign-owned?
Sometimes. A change of control can trigger a different licensing test, a different disclosure obligation, or a different substance expectation, depending on the jurisdiction. The ownership change itself rarely alters the board composition rule directly, but it is frequently the event that exposes whether the existing board already satisfied it.
What does compliance with a director requirement actually involve, day to day?
It involves keeping the appointment terms, the board resolutions and the register entry aligned at the moment each of them changes, not reconciling them retrospectively. A director is not a formality recorded once at incorporation; the requirement is tested continuously, and the record has to be able to show that at any given point in time.
Who inside the company is responsible for keeping board composition compliant?
Responsibility is usually assumed to sit with whoever holds the company secretary function, but the board itself carries the underlying duty and cannot delegate away its consequences. Where no one has been given the task explicitly, it is worth assuming no one is doing it.
What evidence should the board keep to show its composition is compliant?
A current minute book recording every appointment, resignation and removal in the sequence it actually happened, matched against the register entry and the signed appointment terms for each director. The absence of that evidence is treated, in practice, the same way a defect would be treated, because nobody reviewing the structure can distinguish the two.

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