Board of directors

Question 1

who is a director

Answer 1

definition can be found in s1 and S66 of the Act - member of the board , alternate director of the company and includes an person occupying the position of director by whatever name designated

Question 2

what are ex officio members of the board

Answer 2

people who hold office as the director of a company because they hold another office or have some other status designated in the MOI

Question 3

who are “all members of the board contemplated in S66”

Answer 3

directors appointed by a person designated in the MOI

Question 4

what are alternate directors

Answer 4

a person elected or appointed to serve as the occasion requires , as a member of the board of a company in substitution for a particular elected or appointed director

Question 5

who are directors elected by the shareholders

Answer 5

S66 (4) tells us that at least 50% of the board must be elected by the s/hs

Question 6

what is a de jure director

Answer 6

lawfully and properly appointed to the office of director and at the time in question, still in office (can be any type of director)

Question 7

what is a de facto director

Answer 7

persons not lawfully in office at the time in question, they act substantially as directors - a person “occupying the position of director”

Question 8

what is the restricted view of a de facto director?

Answer 8

limited to persons who the company attempted to appoint but then failed to do so effectively due to some irregularity and persons who were properly and legally appointed but whose office had ended at the time in question.

Question 9

what is the broader view of a de facto director

Answer 9

includes any person who substantially acts as a director would, despite the fact that the company might never have attempted to appoint the person as a director

Question 10

what is a nominee director

Answer 10

directors who were nominated by someone else

Question 11

what is a puppet director

Answer 11

a person placed on the board with the idea that they will follow the instructions of another blindly - the puppet director will not be able to avoid liability as they are bound by their duties to the company

Question 12

shadow directors

Answer 12

no SA definition but Eng definition says it is a person who in accordance with whose directions or instructions the directors of the company are accustomed to act - someone calling the shots from the shadows - someone superior who instructs directors

Question 13

Hydrodam requirements for a shadow director

Answer 13

1. directors
2. directed to act in specific way by shadow
3. directors acted in accordance
4. they were accustomed to acting in accordance

Question 14

what is a prescribed officer

Answer 14

a person who performs a specific function designated by the minister in S66 (1) within a company - precise meaning is unclear

Question 15

who are the company’s first directors?

Answer 15

its incorporators who serve as directors until the minimum number of directors in the MOI or Act have been appointed

Question 16

what does S66 (4) (i) allow for

Answer 16

subsequent directors to be elected by shareholders of a person that is designated in the MOI

Question 17

what did the Kuwait say about s/h electing directors

Answer 17

The s/h who elects the director has no duty to see that the directors discharge their duties diligently and competently

Question 18

is a third party allowed to appoint a director

Answer 18

yes - nominee directors

Question 19

are third parties under an obligation to ensure that they appoint the most suitable person for the position

Answer 19

no

Question 20

what section regulates the process for s/h electing directors

Answer 20

S68

Question 21

how many directors must be appointed by the s/h in a profit company

Answer 21

at least 50%

Question 22

can a shareholder vote for a director in his or her own interests

Answer 22

yes they can, the s/h do not owe the company any fiduciary duties or duties of care and skill

Question 23

what is an ex officio director

Answer 23

a director in their official capacity - a person who holds office as a director because they hold another position in the company i.e CEO, CFO

Question 24

why are ex officio directors tricky for labour law

Answer 24

they act as a director and an employee

Question 25

what did the Mampeule case say about directors

Answer 25

executive director and member of board = 2 distinct positions, if the director of the company is also an employee this is a sep contract which may not be contained in the MOI

Question 26

how are directors different to agents

Answer 26

they have similar functions i.e they act on behalf of someone else and do not incur liability when acting on behalf of that thing but S66 gives directors powers that only apply to directors

Question 27

how are directors different to trustees

Answer 27

they both have fiduciary duty but with a trustee the property vests in his capacity as such, the company’s assets belong to the company and not the director

Question 28

how is a director different to a managing partner

Answer 28

directors do not have a financial stake or interest in the business

Question 29

how can a director’s legal position be described

Answer 29

as sui generis

Question 30

what does the act tell us about the composition of the board

Answer 30

very little, we just know that there must be 1 director in a private company and at least 3 in a public company - there is no maximum

Question 31

does the legislation differentiate between executive and non executive directors

Answer 31

no this is an industry term which differentiates between directors who involved in day to day business and directors who are not.

Question 32

what does a non -executive director do

Answer 32

exercises an oversight function

Question 33

what does the king IV require

Answer 33

independent non -exec directors - the majority of the board must consist of them and recommends that the chairperson should be an independent non-exec director

Question 34

what does the act say about board committees

Answer 34

gives the board the authority to appoint committees but it does not prescribe exactly how the committees should function

Question 35

what mandatory committees must the board have

Answer 35

Public companies and private companies with a public interest score exceeding 350 must appoint a

1. audit committee
2. social ethic committee

Question 36

what does S72 (1) say about committees

Answer 36

the board can delegate the authority of a board to a committee in matters referred to it

Question 37

can the board abdicate its responsibilities by appointing a committee

Answer 37

no