The service contracts of individual directors also have to be kept subject to inspection by shareholders without charge. If not at the registered office, the copies can be kept where the company’s register of members is located or at the company’s principal place of business.
Any contract that has less than 12 months to expiry or can be terminated more quickly without compensation is not required to be kept.
In the unusual and probably undesirable situation where the director’s service contract is not itself in writing, the memorandum of its main terms including period of service and salary must be open to inspection. If work is wholly or mainly performed outside the UK a basic memorandum is all that is required.
The reasons for legitimate shareholder interest in the directors’ contracts are larger the salary and the longer the notice period the more expensive it will be to replace the director. The shareholders also have an interest in seeing what provisions are made about such matters as hours and responsibilities.
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