Acting Within Powers: Why Your Company’s Rulebook Matters
The Directors’ Duties Series – Part 1
When Annie joined the board of a growing fintech start-up, she didn’t think much about the company’s Articles of Association. After all, wasn’t that just “boilerplate” paperwork filed years ago?
That assumption cost her.
Months later, Annie approved a new share issue to an investor - a move later challenged by other shareholders. The problem? The Articles required both board approval and a special shareholder resolution, which she hadn’t obtained.
The court found she had acted outside her powers under section 171 of the Companies Act 2006. The share issue was set aside, and Annie faced a claim by the company for breach of duty.
What Does Section 171 Require?
Directors must:
- Act in accordance with the company’s constitution, which includes the Articles of Association and certain formal resolutions, and may also operate alongside other governance documents such as shareholders’ agreements; and
- Only exercise their powers for the purposes for which those powers were conferred.
It sounds straightforward, yet this duty is frequently overlooked, particularly in fast-moving companies where “commercial urgency” tends to trump formalities. But failing to check your authority before taking key decisions can unravel months of work, create shareholder disputes, and expose directors personally to claims.
How to Stay Compliant
- Know your rulebook - Regularly check your company’s constitution before important decisions: issuing shares, signing material contracts, restructuring the company, approving major transactions, or any action that might require shareholder consent.
- Document your authority - Ensure that minutes and resolutions clearly record board decisions.
- Seek early advice - If you’re unsure, take legal guidance before acting, particularly where the Articles or shareholders’ agreements contain bespoke provisions. It is far easier to confirm authority than to unwind an unauthorised decision.
Directors who understand where their powers begin and end not only protect themselves, they build credibility and trust in the boardroom.
How We Can Help
At Chan Neill Solicitors LLP, we regularly advise company directors, boards, and shareholders on governance, compliance, and risk management under UK company law and related legislation.
If you are uncertain about the scope of your powers or other obligations as a director, or wish to review your company’s governance framework, Articles, board procedures, shareholders’ agreements, or compliance processes, our corporate team can advise on practical steps to ensure you meet your duties and manage risk effectively.
Get in touch with us to discuss how we can help you and your business.
Next in the series:
Promoting the Success of the Company (s.172) - balancing the company’s success with wider stakeholder interests.
Disclaimer:
This publication is intended for general information purposes only and does not constitute legal or professional advice. You should not act upon the information contained in this article without obtaining specific legal advice. Chan Neill Solicitors LLP accepts no responsibility for any loss which may arise from reliance on information contained herein.
Sponsorship License Compliance visit – top tips
According to the UK Visa & Immigration Transparency Data, by Q3 of 2025, there were 127,859 licensed sponsors under the Skilled Worker, Student and Temporary Worker routes, which is 3.8 times more organisations that can sponsor migrant workers than in Q4 of 2019 (pre-Brexit).
The Transparency Data provides insight into the number of new sponsor applications submitted each quarter, but is unhelpfully silent on the refusal percentage of the submitted applications.
What is revealed is the number of suspended and revoked Sponsorship Licenses. For example, in Q3 of 2025, there were 608 Licenses suspended and 541 revoked, which is a staggering increase from 2 suspended and 2 revoked Licenses in Q3 of 2021.
Our Experience with Sponsor Licence Compliance Visits
At Chan Neill Solicitors, we have been assisting Licensed Sponsors for many years. We cannot help but notice an increase in the Home Office Compliance visits and Skilled Worker Interviews in recent months. Given the number of revocations and suspensions, as well as the measures that have been and yet to be implemented by the UK Government aimed at the reduction of net migration, the Home Office’s tougher approach is apparent, and the Sponsoring organisations should take their duties and obligations as ever seriously.
This article is primarily aimed at assisting existing License holders with the preparation for the Home Office Compliance visit, but can also serve as a reference point to the prospective sponsors in the preparation for their Pre-License Compliance visits.
There have been reports that the Home Office is moving towards Digital Compliance visits, which are conducted remotely via digital platforms such as MS Teams. While Digital inspections are currently more common in Skilled Worker visa application interviews, in our experience, for Sponsorship License Compliance visits, in-person checks remain the standard practice.
The visit usually lasts 2-3 hours, during which time a series of questions are asked about the company’s nature of business, operations and current CoS allocation, practices used to monitor immigration status and preventing illegal working, maintaining worker contact details, record keeping and recruitment practices, migrant tracking and monitoring, as well as about general sponsor duties.
In particular, the Licensed sponsor must be ready for the following line of questioning and have all the necessary documents prepared for the visit. Note: the interviewee is the company’s Authorising Officer as mentioned on the License.
General Information:
- Full name, date of birth and nationality of the interviewee.
- Interviewee’s position within the organisation.
- Company’s incorporation date.
- Information about current Directors and Shareholders.
- Company’s name and the nature of the business.
- Business address.
- Company’s operational hours.
- Company’s official website.
- Current CoS allocation limit and justification for the current undefined CoS allocation.
- Email address that is accessible by the Authorising Officer.
- Who submitted the Sponsorship License application?
- How members of staff are being paid.
- Tip: Prepare to provide the company’s business bank statements and employees’ payslips.
- What is the company’s pension scheme?
- Has the company requested a refund of a CoS and Immigration Skills Charge from a sponsored worker?
- What funds does the company have available to fund employees’ salaries?
- Tip: Prepare to provide the current contract for services, invoices and other relevant documents.
Monitoring immigration status and preventing illegal working:
- How many members of staff are currently employed, and an explanation of their roles.
- Number of migrant workers employed.
- Procedure used to conduct a right-to-work check.
- Tip: Prepare to present each worker’s valid passport and eVisa (or other form of permission).
- How expiry dates of passports/visas are monitored.
- Tip: Prepare to demonstrate the system currently in place.
Maintaining Worker Contact Details:
- What HR system is currently in place?
- System used to monitor contact details (historical data).
- Tip: Prepare to demonstrate the system currently in place.
- How the changes are recorded.
Record Keeping & Recruitment Practices:
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- Tip: Prepare to provide the company’s up-to-date hierarchy chart.
- What vacancies are available?
- Tip: For employees that require sponsorship, prepare to provide information about job title, SOS Code, salary and weekly working hours.
- What are the company’s recruitment practices?
- Tip: Prepare to demonstrate past and present job advertisements.
- Tip: Prepare to demonstrate CVs and Interview Notes for all candidates who have applied for a job for which a migrant worker was identified.
- Tip: Be prepared to provide an explanation why each candidate was suitable/not suitable for the role on offer.
- Tip: Prepare to provide employment contracts for current employees and a job description for prospective employees.
Migrant Tracking & Monitoring:
- The company’s policies regarding annual leave and how annual leave is requested.
- How the employees’ attendance is monitored.
The questions may have different phrasing, but maintain the underlying purpose of inspecting the compliance with duties and obligations as a Licensed sponsor.
Upon the conclusion of the interview, the interviewee has an opportunity to review the Compliance Officer’s written notes and request corrections if necessary. The interview notes are then passed onto the case working team who makes the final decision.
- Final tip: The interview notes must be read thoroughly before signing to check for any incorrectly recorded information.
To stand the best chance at a successful interview, at Chan Neill Solicitors LLP, we offer Licensed Sponsors service to prepare them for the Compliance Visit, including a mock interview and review of the company’s practices and documents. Do not hesitate to contact our Immigration Team for more information.
This article is provided for general information only. It is not intended to be and cannot be relied upon as legal advice or otherwise. If you would like to discuss any of the matters covered in this article, please contact us using the contact form or email us on reception@cnsolicitors.com