Directors resigning after short time - genuine reason?

Flyonthewall

Hi.

Hoping someone on here can give me an answer.

I've been looking up a company that started up and within a few weeks two out of three directors resigned. The director who is still there was involved with another new company with these other directors and all three resigned around the same time after a few weeks. One was reappointed a few weeks later, only to then resign again a few weeks after that (all in the same year). A different director is still involved and the company remains active.

It's not the first time I've seen something like this. Some directors are also trading under two different names and some have one or more of their companies briefly listed as director with one of the other companies as well.

Is there a genuine reason for this?

Thanks.

tacpot12

Yes, there is a genuine reason for this. The reason may not apply in your case, but it is done by specialist company formation agents who register companies so that someone who needs a company urgently can get one from them. The companies are registered with the name of two directors of the formation company, and these directors then resign as soon as the company is sold to its new owner. Often the name of the company that was registered is changed to reflect the name that the owner wants. 

Flyonthewall

tacpot12 said:

Yes, there is a genuine reason for this. The reason may not apply in your case, but it is done by specialist company formation agents who register companies so that someone who needs a company urgently can get one from them. The companies are registered with the name of two directors of the formation company, and these directors then resign as soon as the company is sold to its new owner. Often the name of the company that was registered is changed to reflect the name that the owner wants. 

Thanks for replying.

There haven't been any name changes. 

I might be wrong, but it doesn't appear to apply in this case. Does that mean it's likely to be something dodgy going on or is it business people trying to help each other out and this is the way they're doing it rather than charging for a service or something?

Sandtree

To be honest, would want to see the changes myself and also look at the shareholdings.

In addition to company formations becoming directors there can be a fair amount of churn in general when companies are set up particularly if there are a collective of companies that are somehow interrelated etc. People doing things quickly then being advised better to do it a different way etc. I wouldn't consider it a significant issue assuming this as historic and the company was more stable after its first year.

Flyonthewall

Sandtree said:

To be honest, would want to see the changes myself and also look at the shareholdings.

In addition to company formations becoming directors there can be a fair amount of churn in general when companies are set up particularly if there are a collective of companies that are somehow interrelated etc. People doing things quickly then being advised better to do it a different way etc. I wouldn't consider it a significant issue assuming this as historic and the company was more stable after its first year.

Thanks.

There's no obvious relation between them from what I can see, but obviously they may have some connection somehow.

It hasn't been a year yet so can't say how stable it is or will be.

For another I looked at, it could possibly be that they were just doing things quickly then.