BLP SGS 11 THE ROLES, RESPONSIBILITIES AND REQUIREMENTS OF DIRECTORS 1

Question 1

How many directors is a public/private company required to have?

Answer 1

Under s.154 CA 2006:

• a private company must have at least one director; and
• a public company must have at least two directors.

Question 2

What is an executive director? What is their role?

Answer 2

An executive directoris a director who has been appointed to executive office. Such a director will generally spend the majority, if not all, of his working time on the business of the company and will be both an officer and an employee of his company.

Art.5 MA permits thedirectors to delegate specific powers to an individual director and may be used to delegate specific powers to an executive director.

Question 3

What are executive directors? What are their roles?

Answer 3

• A non-executive directoris also an officer of the company, but will not be an employeeof the company.
• Non-executive directors do not take part in the day-to-day running of the company. Their role is generally to provide independent guidance and advice to the board and to protect the interests of shareholders
• The term ‘non-executive director’is not defined in CA 2006. Section250 CA 2006, does not differentiate between executive and non-executive directors. The duties, obligations and restrictions placed on directors under the CA 2006will apply to all directors, executive and non-executive
• For the purposes of the BLP module, it is usually only necessary to bear in mind the distinction between executive and non-executive directors if you are considering their employment status.

Question 4

What are shadow directors? What are their roles?

Answer 4

• Under s.251 CA 2006 a ‘shadow director’ is defined as a person “in accordance with whose directions or instructions the directors of the company are accustomed to act”.
• A person is not deemed to be a shadow director by reason only that the directors act on advice given by him in a professional capacity(s.251(2) CA 2006).

Question 5

What are shadow directors? What are their roles?

Answer 5

Companies may provide in their articles for the appointment of alternate directors. Analternate director attendsboard meetings and actsin the director’s place, if the actual director is incapacitated, otherwise engaged or out of the country.

The MA do not provide for the appointment of alternate directors

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