Business Law and Practice - Appointment and Powers of Directors

Question 1

Directors

Answer 1

Have the power to manage normal operations of the business

Shareholders do not have the power to manage simply by virtue of being a shareholder

Executive Directors: employed by company and responsible for its day to day running

Non-executive Directors/NED: operate as consultants, paid a fee for attending board meetings

Question 2

Appointment

Answer 2

First directors are specified in registration document

Must be at least two for PLC but only one required for private company

Majority decision required for appointment of new directors

Any changes to be notified to Companies House within 14 days

Question 3

De Jure Director

Answer 3

Formally appointed

Question 4

De Facto Director

Answer 4

Not appointed by carries out duties of a director and claims to be a director

Question 5

Shadow Director

Answer 5

Influences directors but has not been appointed and does not claim to be a director

Question 6

Decisions

Answer 6

Directors make decisions collectively as a “board”

Board take decisions at a board meeting and decisions known as resolutions

Question 7

Agents of the Company

Answer 7

Can enter into contracts on behalf of company

Actual authority: given in service contract or by a decision of board

Apparent authority: representation (i.e. something done by company) made to 3rd party by company that person in question acting with company’s authority - cannot give yourself implied authority