Creative UK Invest insights
Nick Cavander, Investment Manager
When a UK Limited Company sets up in Companies House, a minimum of one director is required to make sure the company’s legal operating requirements in its Articles of Association are followed, including signing off the annual accounts.
Since no requirement for a company board exists, taking time to establish and run one is understandably often overlooked by resource constrained company directors, particularly in the creative sector where the focus is on production and delivery.
Companies have so much on their plates running the business that governance often ends up becoming a compliance activity by the director(s) rather than forming part of the business operational strategy.
At Creative Growth Finance (Creative UK’s investment fund) we’ve seen that companies with robust boards consistently achieve higher levels of success. So, I’d like to share why we think every company without a board set up should consider doing so immediately and why this brings so much value.
Like insurance, having a board in place often matters most when you need it, but can feel like a resource burden or formality along the way. But a board isn’t just insurance, it is also about ensuring success and growth, so it really is one of the best investments of time and resources a company can make into itself.
When we look at making an investment decision at Creative Growth Finance, one of the core items in our due diligence is a review of the track record of the company’s director(s) and board structure and activity. If that board structure doesn’t exist, or only exists in an ad hoc manner, we’ll usually make it a condition of our investment that a more robust board is established within 6 months of our investment.
Not only does this give us comfort and security that our investment will be looked after, it also gives us confidence that if the company needs funding (or becomes an acquisition target) in the future, those opportunities won’t be scuppered by a lack of historical governance and legacy financial reporting issues.
Having an established board will affect how future investors view and value the business, and the board itself is crucial to guide that investment journey to an optimal outcome.
Here is a practical overview of what we think a board should look like and what it should do at a small/medium enterprise UK limited company.
Board Members & Structure
Board Duties & Activity
If you’d like more information and resources about forming and running a company aimed at creative business founders, please see our Creative Growth investment resource library here.