Find out if SIA licensing requirements for directors affect you
Understand the definition of ‘director’ so you know if you need to apply for a licence.
You must have an SIA licence if you are a director of a company where any other directors, partners or employees of that company perform licensable activities in their job.
Read more about licensable activities.
This rule applies to executive and non-executive directors, statutory and non-statutory directors, and directors of parent companies. It also applies to shadow directors and, in body corporates whose affairs are managed by their members, members of those body corporates. This means you may need to apply for an SIA licence even if you do not have the word ‘director’ in your job title.
We have published this guidance to explain what we mean by ‘director’ so you can understand if you need to apply for a licence. However, this guidance does not replace or take precedence over the Companies Act 2006.
Shadow directors
You need an SIA licence if you are a shadow director of a company where any other directors, partners or employees perform licensable activities in their job.
The Companies Act 2006 defines a shadow director as ‘a person in accordance with whose directions or instructions the directors of the company are accustomed to act’.
A shadow director is usually someone who the directors of a company report to or whose directions they act under.
An example of a shadow director would be someone who is not listed as a director at Companies House, but who still controls the running of the company.
Directors of parent companies
You need an SIA licence if you are a director in a parent company to a subsidiary company where any other directors, partners or employees perform licensable activities in their job.
A parent company has control or influence over another company. A subsidiary company is the company that the parent company controls or influences.
You also need an SIA licence if you are a director in a parent company to a subsidiary company which itself has a subsidiary where directors, partners or employees perform licensable activities in their job.
We have provided some examples below to help illustrate this point.
Example 1
Company A has a subsidiary, Company B. No one in Company A or Company B performs licensable activities. However, Company B has another subsidiary, Company C, which does have directors, partners, or employees performing licensable activities.
The directors of all three companies need to be licensed, because Company C is a subsidiary of Company B, and Company B is a subsidiary of Company A. This makes Company A the parent company of both B and C.
Example 2
Company A has three subsidiaries: Company B, Company C and Company D. Only Company B has directors, partners, or employees performing licensable activities.
The directors of Company A and Company B are required to hold SIA licences, while the directors of Company C and Company D are not.
This is because the directors of Company C and Company D do not have any responsibility for activities requiring an SIA licence.
This would change if they became involved in managing and operating Company B. If they did, they would become shadow directors of Company B and would need to be licensed.
Members of body corporates
What is a body corporate?
A body corporate has its own legal identity separate from any directors, individual members or shareholders.
The 2 most common types of body corporate are limited companies and limited liability partnerships.
Characteristics of limited companies are:
- they are the most common type of company
- they usually have LTD at the end of their names
- their finances are separate from the personal finances of their owners, so the owners have limited liability for the company’s losses or debts
Characteristics of limited liability partnerships are:
- they usually have LLP at the end of their names
- unlike normal partnerships, their members have limited liability for the business’s losses or debts
- each member’s liability depends on how much money they invested in the business and any personal guarantees they gave to raise finances
- each member usually takes an equal share of the profits
Other examples of a body corporate would be a Community Interest Company (CIC) or a Charitable Incorporated Organisation (CIO).
Sole Traders and Partnerships are not body corporates.
When you may need to be licensed as a member of a body corporate
You may need an SIA licence if you are a member of a body corporate where:
- members of that body corporate perform licensable activities
- the affairs of the body corporate are managed by its members
An example of this would be if a local council provides CCTV which it contracts from a separate organisation. The elected councillors are members of a body corporate that manages licensable activities, so they must hold SIA licences.
Which licence to apply for
Apply for a front line licence if you want to be covered for personally carrying out licensable activities. You will usually need to get a separate front line licence for each type of licensable activity that you do.
Apply for a non-front line licence if you will not be personally carrying out licensable activities. You only need to apply for one non-front line licence. You do not need to apply for a non-front line licence if you already have a front line licence.