Directors - The Role Flashcards
(23 cards)
To whom are directors accountable?
They owe duties to the company
What is the relationship between directors and shareholders?
Directors - manage the company, owe duties to the company and may require shareholder authority for certain actions
Shareholders - own the company, but only control certain key decisions through resolutions
What does MA provide regarding Directors’ powers?
The board of directors may exercise all the powers of the company, subject to the companies act and any restrictions in the articles
Some examples of director powers not requiring shareholder approval?
- Hiring staff
- Entering contracts
- Buying/selling company property
- Raising finance and granting security
- Preparing accounts and working with auditors
What does MA 5 allow directors to?
Delegate powers to a single director or committee
What civil or criminal consequences can directors face for wrongdoing?
Civil liability under CA and Criminal offences
How is a director defined?
Any person occupying the position of director, by whatever name called.
What are the categories of directors in law?
- De Jure - validly appointed
- De facto - acts as director but not validly appointed
- Shadow - gives instructions that directors follow
What are the categories of directors in practice
- Executive directors - have executive roles within the company, usually an employee
- Non-executive directors - not involved in daily management; provide independent oversight and advice
Can a company be a director?
Yes - but every company must have at least 1 natural person as director
What is the minimum age for a director?
16
De Facto director?
Acting as a director without being properly appointed - still subject to fiduciary duties and liability
What do shadow directors exclude?
People giving advice in a professional capacity eg lawyers, accountants
Which statutory provisions apply to shadow directors?
- Director register duties
- transactions requiring shareholder approval
- Service contract disclosures
- Wrongful trading
Do executive and non-executive directors have different legal duties under the CA?
No - all directors are subject to the same statutory duties, regardless of their title or level of involvement
What is an alternate director?
A person appointed to act in place of a director who is absent - they usually have the same voting powers as the absent director
Do MA allow for alternate directors?
No
Are alternate directors subject to CA 2006 duties?
While not expressly stated, it is generally accepted that they are subject to the duties
What are the main duties of the company secretary?
- Maintaining statutory registers
- Preparing minutes of meetings
- Making filings at CH
If there is no company secretary, who performs their duties?
The directors, or someone they authorise
Is a company secretary required?
Private - No
Public - Yes
What qualifications must a public company secretary have?
Must have knowledge and experience, and meet one of the listed qualifications (E.g. Solicitor, chartered accountant)
Shadow director?
A person “in accordance with whose directions or instructions the directors are accustomed to act.”
