Ch:3 Flashcards
Who is a director in a company?
A person appointed by members to manage company affairs, regardless of their job title.
What is the collective term for directors
Board or Board of Directors (BOD).
Does having “Director” in a job title mean a person is legally a director?
No, titles like Finance Director or HR Director do not automatically mean legal directorship.
What is the fiduciary role of a director
Directors must act in the best interests of the company and shareholders
Give an example of fiduciary misconduct.
A director makes a profit from a contract with the company without disclosing personal interest.
What is the agency role of directors?
A:
Directors act as agents of the company and follow the articles of association.
Who can be a director?
A natural person who is a member (with exceptions).
What additional criteria may apply to director
Holding qualification shares, education, and experience (e.g., for banking and insurance companies)
Name cases where a non-member can be a director
Whole-time executive director (employee).
2. Chief executive.
3. Representative of a government/body corporate member.
4. Representative of a creditor or special interest through contractual arrangements.
Name three persons who cannot be directors.
A minor.
2. A person of unsound mind.
3. A person convicted of an immoral offense.
Can a company be a director?
A: No, a company cannot be a director of another company.
What happens if an undischarged insolvent acts as a director?
A
: They may face up to 2 years in prison, a fine, or both.
Who is disqualified from being a director of a listed company?
A:
- A financial institution defaulter.
2 . A person or spouse involved in a brokerage business
What is a broker?
.
A: A person who buys and sells securities for themselves or others
What is the maximum number of directors allowed under Companies Act 2017?
A: Not specified—determined by Articles of Association or Board
Who appoints the first directors of a company?
Subscribers of the memorandum.
How long do elected directors hold office
Three years unless they die, resign, or are disqualified.
When are first directors’ details submitted?
Along with incorporation documents
What causes a casual vacancy among directors
Death, disqualification, or resignation
Death, disqualification, or resignation
The Board appoints a new director for the remaining term.
When is filling a casual vacancy mandatory?
A:
1. If the company is listed (must be filled within 90 days).
2. If remaining directors fall below the legal minimum.
