04. directors Flashcards
what are some of the decisions reserved for shareholder approval?
- change of name (unless Articles provide otherwise)
- amending Articles
- removing directors
- removing auditors
a Board with MA is usually free to make all other decisions (MA 3)
what is MA 5?
allows the Board to delegate particular decisions and responsibilities for the day-to-day running of the company to one of the directors or to a committee.
e.g., An HR Director might be delegated decision-making with regards to the HR decisions of a
company.
how can directors be legally held to account?
civil and criminal actions under the Companies Acts
found guilty of criminal actions and sentenced under:
- Fraud Act 2006
- Theft Act 1968
- insider dealing under Criminal Justice Act 1993
- money laundering under Proceeds of Crime Act 2002
can a company have a corporate as its only director?
no, every company must have at least one
director who is a natural person
maximum no of directors in MA
no maximum
age restrictions on directors
at least 16 years old
de jure director
director who has been validly appointed at law
fiduciary duties and liabilities apply
de facto director
someone who assumes to act as a director but who has not been validly appointed as such
fiduciary duties and liabilities apply
shadow director
‘a person in accordance with whose directions or instructions the directors of the company are
accustomed to act’; ‘behind the scenes’
fiduciary duties and liabilities apply
who cannot be a shadow director?
a professional advisor
executive director
generally spend the majority, if not all, of their working time on the business of the company
✅officer
✅employee
Examples include a Finance Director, Managing Director, Marketing Director.
non-executive director
✅officer
❌employee
Non-executive directors do not take part in the day-to-day running of the company.
generally provide independent guidance and advice to the board and to protect the interests of shareholders.
alternate director
usually either a fellow director of the company or
someone who has been approved by a resolution of the board of directors
same voting powers as absent director
company secretary
officer of the company who deals with the
company’s legal administrative requirements.
do public and private companies need to have a company secretary?
✅public
❌private
appointment of a director for companies with MA (two options)
- ordinary resolution of the shareholders (more than 50%)
- board resolution of the directors (more than 50%)
in practice, board resolution
can rules on appointment of a director be altered?
yes, Articles can be amended
are all directors entitled to payment for their services?
no, only directors who are also employees with service contracts are
can an individual be a director/officer, shareholder and an employee?
yes
in relation to directors, what registers must the company maintain?
- register of directors
- register of secretaries
who should be notified of a change to directors?
AP01 - Companies House
who should be notified of a change to company secretary?
AP03 - Companies House
The information kept at Companies House is available for inspection by who?
the public
the register kept at a company’s registered office must be open for inspection by who?
- any member of the company - without charge
- any member of the public - for a free
what personal information does a director / company secretary need to include on the register for public inspection?
service address, which does not need to be residential (can be the registered office)
resi address must be provided for a separate, secure register
will residential addresses already on the register be removed automatically?
no
what info must be provided re directors and past directors remuneration in the annual accounts?
includes:
* The directors’ salaries, bonus payments and pension entitlements; and
* Compensation paid to directors and past directors for loss of office.
- any payments made to, or receivable
by, a person connected to such a director or a body corporate controlled by a director.
- disclosure of information on advances and credits given by a company to its directors or guarantees entered into by a company on behalf of its directors (applies to any person who was a director during the applicable financial year)
other than removal by shareholders, how can a director leave office?
- resignation by notice
- automatic termination
- disqualification
how does resignation by notice take place?
director will tender a letter of resignation (MA 18(f))
usual, but not obligatory, for the Board to pass a Board resolution accepting the letter of resignation
when will a director be automatically terminated?
Under MA 18 a person ceases to be a director as soon as:
- The director becomes disqualified from being a director;
- The director becomes the subject of an IVA (or similar);
- The director becomes bankrupt; or
- A registered medical practitioner who is treating the director states in writing to the
company that the director has become physically or mentally incapable of acting as a
director and will remain so for more than 3 months.
when might a director be disqualified?
Company Directors Disqualification Act 1986 (CDDA)
the court may make a disqualification order against a person preventing them, unless they
obtain leave of the court, to be a director, liquidator, receiver or in any other way directly or
indirectly involved in the promotion, formation or management of a company
maximum 15 years period of disqualification
criminal offence to participate in mgmt of company without leave of the court
- fraudulent trading
- wrongful trading
- persistent breaches of company law
what is retirement by rotation?
The MA for public companies require retirement and reappointment of directors by the
members every three years.
All directors of listed companies are subject to annual re-election.
who can remove a director under MA?
only shareholders
how could the Board remove a director?
only if Articles are amended to provide for this