Chapter 2 - The Directors Flashcards
What are the key differences between an executive director and NED?
Executive Directors are employees usually full - time and responsible for implementing company strategy.
NED’s are not employees, usually part - time and responsible for setting corporate goals and strategy.
Must directors have the word ‘ director’ in their job title?
Not a requirement.
What criteria prevent an individual from being independent?
- Long association with the company
- Recent material business interest
- Represents a significant shareholder.
- Share options
- Cross - Directorships
- Being an employee
What form should be used to notify the Registrar of the appointment of an individual as a director?
Form AP01
Which statutory registers should be updated on the appointment of a director?
- Register of Directors
- Register of Directors’ residential addresses
What information should be obtained from the new director?
- Full Name
- DOB
- Service and residential address (if different)
- Nationality
- Occupation
Who cannot be appointed as a director?
- Person under the age of 16
- A disqualified person
- A bankrupt
- An auditor or employee of the audit firm
- A director of an insolvent company cannot be appointed as a director of a company with a prohibited name without consent of the court
- Anyone not meeting any specific criteria in the Articles
What are the seven codified duties of directors?
- To act within powers
- To promote the success of the company
- To exercise independent judgement
- To exercise reasonable care, skill and diligence
- To avoid conflicts of interest
- Not to accept benefits from third parties
- To declare interests in any proposed transaction or arrangement
Do Directors have unfettered (unrestrained or uninhibited) authority to exercise the company’s powers?
No. Their authority is subject to any provisions in the Articles, their service contract and any authority limits adopted by the board.
To act beyond this will be acting Ultra Vires (acting or done beyond one’s legal power or authority.)
Can Directors delegate any of their powers and duties?
Yes - to committees of the board.
How many Directors may be appointed?
Any number subject to any maximum set out in the Articles. The model articles do not provide for a maximum number of directors.
Under what circumstances can a Director be disqualified?
- For unfitness
- On conviction
- For breach of statutory obligations
- For fraudulent or wrongful trading
- In the public interest
- By voluntary undertaking
- On competition grounds
Do the remaining directors need to approve the resignation of a director?
No
How soon must notification of the vacation of office by a director be notified to Companies House?
Within 14 days of the director vacating the office
How many directors should retire at the first AGM of a public company?
All
