Why do agencies insist on LTD companies only having one director

[dingdong]

Hi

I'm curious why many agencies insist that contractor's limited companies can have only one director with 100% shareholding - my last agency reluctantly agreed that they would accept two directors provided they were in a relationship who lived at the same address, and anything more than that would have not be accepted under any circumstances.

It's only one director who signs the agreement with the agency, and the agency would not be able to stop you adding 5 directors or changing your shareholders at any point after you'd signed the paperwork with them.

What's the issue they are so concerned about?

[TheFaQQer]

Why do agencies insist on LTD companies only having one director?

Because they are stupid.

I've never had an agency ask me about it, though - they have asked me to confirm that I'm a director and that's it. I don't sign any contracts, since I prefer to delegate that to the Company Secretary to do.

[Eirikur]

I was wondering the same thing. Haven't got any personal experience with that question, but have seen it several times on here, agencies asking to confirm that there's only one director with 100% shareholding.
What is their reasoning behind this?

[LondonManc]

I was wondering the same thing. Haven't got any personal experience with that question, but have seen it several times on here, agencies asking to confirm that there's only one director with 100% shareholding.
What is their reasoning behind this?

I'd imagine it's because they don't want to be involved in tax dodging schemes, as per a couple of questions asked yesterday about having their uncle as majority shareholder or something.

[northernladuk]

Why not ask them? I'd be interested to know.

I've never been asked this before either so I'd argue the 'many' comment as well.

I wonder if someone is new and not used to using agencies their interests are peaked when it doesn't go as smoothly as normal so they have to start asking questions like this? I tend to find if you can get over the fact you know what you are talking about all the agency crap goes out the window and you get everything done much more smoothly.

[VectraMan]

Because they really want to be signing a contract with you personally (i.e. the disguised employee that's doing the work). If you're the sole director and 100% owner then that's as good as the same thing; an agreement from somebody else's company or that's part-controlled by somebody else could cause some issues.

[dingdong]

I was dealing with the largest agency in the country at the time so you'd like to think they had some logic behind their ways of working

(although trying to get a straight answer from the individual agent was a non-starter as they were clearly just following process and were clueless themselves)

Most people just comply in the rush to get the deal signed rather than kicking up too much of a fuss.


Thanks Vectraman - although I'm still not sure what issues that part-control could cause - you'd think agencies would ensure their contractual agreements protected them all the bases they were actually worried about.

[TheFaQQer]

Most people just comply in the rush to get the deal signed rather than kicking up too much of a fuss.

I find that hard to believe - they buy shares back from other shareholders, and / or remove directors from the board in a rush to get the deal signed?

[LondonManc]

They may have been stung in the past. You could almost imagine the scenario of some rate-hunting twunt trying to jump ship early by claiming that the contract isn't enforceable because while they signed the contract, they weren't the majority shareholder.

[dingdong]

I find that hard to believe - they buy shares back from other shareholders, and / or remove directors from the board in a rush to get the deal signed?

No sorry I meant I complied by providing ridiculous levels of proof that my second director lived at my same address, their ID etc. rather than kicking up a fuss waiting for them to provide a decent explanation of why it was even an issue for them.

However if I had been in the situation where I three directors I probably would have set up a new LTD company for this particular gig rather than lose it if the agency wouldn't budge.