Director Flashcards
Shadow director
Person on whose commands or instructions the directors are accustomed to act
De facto director
Person who purports to act as though they were director
Alternate director
Who attends board meetings when director is unable to attend
Non executive director
-Integral element of corporate governance
-Bring an independent view
-Help in providing effective leadership
-Help to establish and maintain financial probity
-keep an eye on executive director
Private comp should have atleast
1 director
Public company should have
Atleast 2
Eligibility of director
Over 16
May be non natural person
Must not be disqualified by CDDA
Must not be bankrupt
Not unsound mind
Should not be absent of board meetings without permission for a period in excess of 6 months
Company director is disqualified for period generally
In general, disqualification period is up to 15 years
On no of grounds, court may decide a person is disqualified to act as a director
For an offence committed in the promotion, formation, management, liquidation or striking off a company
Persistently in default (3 offences in 5 years) of filing returns
Found guilty of fraudulent or wrongful trading
When involved in a company insolvent liquidation (2 in period of 5 years)
Breaking the disqualification order
Upto 2 years in prison
First directors
Named in documents sent to registrar before incorporation
Subsequent director appointed by:
Members in general meeting
Other directors - fill casual vacancy
The court (rare)
A lender (if part of the loan agreement)
Administrator (under an administration order)
1/3 rotation procedure
Every general company,
Ftse top 350 (public quoted company)
Every year all directors retire
Directors are appointed by which resolution
Ordinary resolution
And registrar is notified
Directors removed by which resol
Ordinary resolution
Directors removal (special notice)
Notice period is special
-28 days notice to company (director involved)
-21 days notice to members (shareholders)
Opportunity to make written representations of reasonable length and not defamatory in nature
Must satisfy legal restrictions of removal
100 members holding greater than or equal to 100 pound share capital on average
Notice to registrat
28 days notice sent to registrar too
And representation also
Company may have to pay
Substantial compensation to removed director (if contract was made so breach of contract)
Statutory duties of directors - 7 duties
Act within their powers
Perform their duties with reasonable skill, care and diligence
Promote success of company
Independent judgement
Avoid conflict of interest
No benefits from third parties
Declare interest in transaction/contracts
Directors - promoting success
-Statute trying to encourage long term approach by directors
-Directors to have regard for all stakeholders (who have direct or indirect interest in the company) pakistan pollute
Non exhaustuvr list of matters
Non exhaustive list of matters director need to consider:
-Long term consequences of their decision
-employees interest
-good relationship with customers and suppliers
-local community and environmental impact
- high standards of business conduct
- good reputation
- fair treatment for all members
Directors - controls (service contract should not be
More than or equal 2 years then members approval required
For public comp not more than 1 year and if they do compensation payable on termination shud not exceed 1 year salary
Acquisition of non cash assets memberd approval if >_ 10% of company’s assets
But not less than 5ooo pounds
And always if greater than 100,000 pounds
If 10% zyada hojaye toh approval
No company may lend money
Provide security nor guarantee a loan to director of itself, nor of its holding company unless approved by members
Relevant company restrictions apply to connected persons
Control
Relevant companies cannot
Quasi lend (unless less than 5000)
Approve credit transactions (unless less than 10,000) unless approved by lenders
Loans by money lending companies allowed for purchase or improvement of main or only residence up to 100,000
