Ownership and Management Flashcards
(44 cards)
What is a Director?
Every person occupying the position or fulfilling the role of Director.
What is a de facto director?
Anyone who acts as one but isn’t appointed. Anyone who becomes one through their conduct (implied authority)
What is a de jure director?
A person who has been appointed following the correct legal procedure (could be laid out in articles of association)
What is a shadow director?
Not a director anymore but who still gives out instructions that the directors follow.
What is an alternate director?
The alternate director is someone appointed by the real directors to act on their behalf.
What is an executive director?
Someone who is employed full time and has a specific role e.g marketing or finance.
What is a non-executive director?
Works part time. Is outside the company and brings outside expertise. Exerts control over the directors.
What is a Managing Director?
The Board delegates the management role to this individual.
What is a chairman?
Usually a non-exec director and they are required to make sure that the meetings are run properly.
How are Directors appointed?
By ordinary resolution or the other Directors. Once they are appointed they have all the power to do as the others do, unless their appointment was faulty. PLC should vote in each Director.
How soon must the registrar be told about appointments?
14 days of the appointment.
How are Directors removed?
Ordinary resolution with 28 days special notice.
How must Directors exercise their power?
In accordance with the company constitution.
What can members tell the Directors to do?
They can instruct on the managing and running of the business. Once they have delegated they have no power to tell the Board how to make decisions. The company and the shareholders are separate and the Directors are running the company.
What limitations does the CA 2006 impose on Directors?
Only use powers for the purposes they have been given for.
For what actions must Directors get a special or ordinary resolution to do?
Altering the articles of association. Reducing the share capital - doing this is difficult and requires approval.
What does having restrictions in the articles do?
Limits the powers the Directors can use. Not many companies have these restrictions.
How can members restrict the power of the Directors?
Ordinary resolution and get them removed. Special resolution and change the articles to limit the power - basically stop them in their tracks.
What does S40 CA2006 say?
The directors have the power to bind the company and this is not limited by the company constitution provided the other party is acting in good faith and doesn’t know they shouldn’t bind but is taking advantage of an attempt to anyway. Even when they do know there still needs to be proof they aren’t acting in good faith.
When are S40 transactions voidable?
When the third party is also a director or a person associated with a director. This makes it voidable. If this happens any parties involved in authorising are required to compensate the company for profit/loss.
What does s171 of the CA say?
Directors must act within their power and only use them for the purposes given.
What does s172 of the CA say?
Directors must act in good faith and work to promote the success of the company. Must consider consequences and the interests of all related parties in a company when making choices. Have to do everything with reasonable care/skill/diligence.
What does s173 of the CA say?
They must exercise independent judgement.
What does s174 of the CA say?
The standard expected of a director is that of a reasonably diligent person. What would a director reasonably be expected to know. What are their actual knowledge and skills.
