The short answer
To add a director, the company files form AP01 with Companies House within 14 days of the appointment, and the new director must verify their identity. To add a shareholder, the company either issues new shares, filing SH01 within a month, or an existing shareholder transfers shares, and the register of members is updated.
Checked 26 October 2026. Rates for 2026/27.Key facts
| Fact | Detail |
|---|---|
| Appoint a director | Form AP01 within 14 days |
| Issue new shares | Form SH01 within 1 month |
| Transfer shares | Stock transfer form, update register |
| Stamp duty on transfers | 0.5% above £1,000 |
| Update PSC register | Within 14 days of change |
Directors and shareholders are different roles
A director runs the company day to day and has legal duties to it. A shareholder owns a share of the company and is entitled to dividends and a say in major decisions. One person can be both, and in many small companies they are. But the two roles are legally separate, and adding or removing one does not automatically affect the other.
Before you add anyone, decide which role they should have, and whether they need both. A trusted employee might be made a director with no shares, while an investor might receive shares but no director role.
Appointing a new director
To appoint a director, first check the company’s articles of association, which set out how directors are appointed, usually by a board decision or by shareholders. The new director must be at least 16, not disqualified, and willing to act. Gather their name, address, date of birth, nationality, occupation and a service address.
The company then files form AP01 with Companies House within 14 days of the appointment. The new director must verify their identity, and the company will need their personal code. The company should update its register of directors, and the director should sign a consent to act.
The legal duties of a new director
A director owes duties to the company under the Companies Act 2006. These include acting within the company’s powers, promoting its success for the benefit of its members, exercising independent judgement, using reasonable care, skill and diligence, avoiding conflicts of interest and not accepting benefits from third parties.
A director can be personally liable for wrongful trading, breaches of duty and some tax liabilities. Make sure the person you appoint understands their duties, and consider arranging directors’ and officers’ insurance if the company has outside investors.
Issuing new shares to a new shareholder
There are two ways to add a shareholder. The company can issue new shares to them, which brings money into the company and dilutes the existing owners. To do this, the directors must have authority to allot shares, and existing shareholders may have pre-emption rights, which means they must be offered new shares first unless waived.
After the allotment, the company files a form SH01 with Companies House within one month, and updates its register of members and issues a share certificate. The price paid per share should be recorded, and for tax reasons, shares issued to employees or family should be priced at market value.
Transferring existing shares
The alternative is for an existing shareholder to transfer some of their shares. The parties sign a stock transfer form, and the company updates its register of members and issues a new certificate. If the buyer pays more than £1,000, stamp duty of 0.5% is due on the price, and the form must be stamped by HMRC. A gift of shares, with no consideration, generally has no stamp duty.
For tax, the seller may have a capital gains tax liability, though a transfer between spouses or civil partners usually takes place at no gain or loss. If the shares are given to an employee, there may be income tax and National Insurance consequences.
Updating the register and the PSC details
When ownership changes, check whether anyone becomes a person with significant control, which means holding more than 25% of the shares or votes or having control over the company. Update the register of people with significant control within 14 days and notify Companies House within a further 14 days. If the shareholders change, the next confirmation statement must show the new position.
Failing to update these records is an offence, so keep the statutory registers tidy. A short checklist after any change in ownership helps.
Agreements and tax points to settle first
Before bringing in a new shareholder or director, put the terms in writing. A shareholders’ agreement can cover how decisions are made, what happens if someone leaves, what the dividend policy is, and how shares can be transferred. A director’s service agreement can set out pay, duties and notice periods.
Think about tax before you act. A new shareholder affects how dividends are split, and a new director may be on payroll. If you want to give shares to employees, consider approved schemes such as Enterprise Management Incentives, which offer tax advantages. A short review with an adviser can save a lot of trouble later.
Removing or replacing a director
The reverse process is just as important. When a director leaves, the company files form TM01 within 14 days of the resignation. The company’s registers are updated, and any bank mandates and HMRC records are changed. If the departing director was also a shareholder, they remain one until their shares are transferred or bought back, so deal with the shares in the same process.
If the company would have no directors left, it must appoint a new one straight away, because a private company needs at least one director who is a natural person. Keep clear minutes recording the decisions made.
Practical steps for a smooth appointment
A short checklist makes the process smoother. Agree the role and terms in writing. Collect the new director’s details and ID. Ask them to verify their identity and give you the personal code. File form AP01 within 14 days. Update your registers and the PSC register if needed. Tell HMRC, your bank and your insurers. Add the person to payroll if they will be paid.
For shareholders, check the articles and any shareholders’ agreement, obtain consents, complete the share issue or transfer and update the registers. Taking these steps in order prevents the most common problems.
Common mistakes when changing ownership
A few errors come up repeatedly. Companies forget to file the AP01 or SH01 on time, leaving the public register out of date. They issue shares without checking pre-emption rights, which can give an existing shareholder grounds to challenge the issue. They give shares to a family member without thinking about the tax effect, or without a record of the market value. And they forget to update the PSC register, creating a compliance breach. Keep a simple checklist for every change in directors or shareholders, and ask your accountant to confirm each filing has been accepted by Companies House.
The bottom line
To add a director, the company files form AP01 with Companies House within 14 days of the appointment, and the new director must verify their identity. If you would rather not do it alone, our fixed fees start at £45.83 + VAT a month.
Frequently asked questions
How do I add a director to my limited company?
Appoint them under the articles, file form AP01 with Companies House within 14 days, make sure they verify their identity and update the company’s registers.
How do I add a shareholder to my company?
Either issue new shares and file form SH01 within one month, or have an existing shareholder transfer some of their shares. Update the register of members in both cases.
Is stamp duty payable when I transfer shares?
Stamp duty of 0.5% is payable if the price paid is over £1,000. Gifts with no consideration do not normally attract stamp duty.
Does a director have to own shares?
No. A director does not have to be a shareholder, and a shareholder does not have to be a director. The roles are separate.
What is a person with significant control?
Someone who owns more than 25% of the shares or voting rights, or who otherwise controls the company. They must be recorded on the PSC register.
How long do I have to notify Companies House of a new director?
Within 14 days of the appointment, using form AP01. Failing to do so can lead to a fine for the company and its officers.
This article is general information, not personal tax or financial advice. Rules and rates change, so check GOV.UK or speak to an accountant about your circumstances. Rates shown are for 2026/27, last checked November 2026.