topic 8: board of directors

Question 1

What section of the Companies Act outlines the board’s authority?

Answer 1

Section 66(1)

Question 2

Who is considered a director under the Act?

Answer 2

Anyone fulfilling director-like functions

Question 3

What is a de facto director?

Answer 3

A person acting as a director without formal appointment.

Question 4

What is the minimum number of directors for a private company?

Answer 4

1

Question 5

What is the minimum number of directors for a public company or NPC?

Answer 5

3

Question 6

What are the types of directors?

Answer 6

Alternate
Ex officio
Elected
Temporary
MOI-appointed

Question 7

What does Section 67(1) state?

Answer 7

Incorporators are the first directors until others are appointed.

Question 8

What is required for consent to act as a director?

Answer 8

Written consent (Sec 66(7)(b))

Question 9

What disqualifies a person under Section 69?

Answer 9

Insolvency
dishonesty
court declarations

Question 10

What happens if a director becomes disqualified?

Answer 10

Ceases to be a director immediately

Question 11

What section addresses director vacancies?

Answer 11

Section 70

Question 12

What are the methods of director removal?

Answer 12

Shareholders (ordinary resolution)
board
tribunal

Question 13

Who can apply to court if removal is unfair?

Answer 13

The removed director (within 20 business days)

Question 14

What is the quorum for a board meeting?

Answer 14

Majority of directors

Question 15

Can a board meeting be conducted electronically?

Answer 15

Yes

Question 16

What is the business judgment rule?

Answer 16

A safe harbor rule for directors acting in good faith and with diligence (Sec 76(4))

Question 17

What must a director disclose under Section 75?

Answer 17

Any personal financial interest and material information

Question 18

What is a material financial interest?

Answer 18

An interest significant enough to affect decision-making

Question 19

What must a director do during consideration of a conflict matter?

Answer 19

Disclose

Question 20

What liabilities are covered under Section 77?

Answer 20

Breach of duty
acting without authority
reckless trading
false/ misleading publication

Question 21

What is the maximum period of delinquency?

Answer 21

Lifetime for serious misconduct; 7+ years for others

Question 22

What grounds justify probation under Section 162?

Answer 22

Neglect of duty

Question 23

What is reckless trading under Section 22?

Answer 23

Operating business with gross negligence or fraud

Question 24

What protection does Section 76(5) give to directors?

Answer 24

Allows reliance on competent professionals or committees

Question 25

Can shareholders ratify director breaches?

Answer 25

Yes

Question 26

What must the company maintain under Section 24?

Answer 26

A record of directors

Question 27

Who can access the director records?

Answer 27

Shareholders and the public (per Section 26)

Question 28

What is required to elect directors in profit companies?

Answer 28

At least 50% must be elected (Sec 66(4)(b))

Question 29

What is Section 74 about?

Answer 29

Resolutions without meetings

Question 30

What duties do directors owe?

Answer 30

Fiduciary care skill diligence statutory

Question 31

What is the duty of independent judgment?

Answer 31

To act freely and not under the influence of others