Director's Service Contract - Drafting

Question 1

Structure

Answer 1

1) Parties
2) Definitions/Interpretations
3) Term
4) Director’s duties
5) Director having outside interests
6) Place of work
7) Hours of work
8) Salary and benefits
9) Absences from work
10) How will the directorship end
11) Governing law and jurisdiction
12) Alternative dispute resolution
13) Execution

Question 2

Parties

Answer 2

(1) Company (the “Employer”)
(2) Director (the “Employee”)

Question 3

Term

Answer 3

Term of director’s appointment must include commencement date.
4 choice of types of terms:
1) Indefinite term - lasting until terminated by notice
2) Specified term - during which director cannot be dismissed
3) Fixed term - subject to termination by notice
4) Initial specified term

Question 4

Director’s Duties

Answer 4

1) Job title/brief description of work for which they are employed
2) Comply with articles
3) Abide by any statutory, fiduciary or common-law duties
4) Not to do anything that would cause them to be disqualified from acting as a director
5) Do such things as are reasonable and necessary to ensure compliance with Companies Act

Question 5

Director having outside interests

Answer 5

Normally the company imposes a total ban on the director conducting any outside business activities during their appointment unless they have been previously approved by the company

Question 6

Hours of work

Answer 6

Whether the director is to be employed full time or part time

Question 7

Absences from work

Answer 7

State the number of days’ paid holiday in each year that the director is entitled to take. Will include maternity, paternity, adoption, parental and bereavement leave.

Question 8

How will the directorship end

Answer 8

They will not be able to resign as a director of the company without the consent of the board of directors or otherwise as provided for in the articles of association of the company. Restrictive covenants - restrictions on the director’s conduct after termination e.g not soliciting or dealing with the company’s customers, not poaching its employees and not competing with the company’s business

Question 9

How will the directorship end - Termination without notice

Answer 9

Will include a long list of grounds on which the company can do this e.g:
1) Director has been disqualified from acting as a director
2) They are guilty of gross misconduct affecting the company’s business
3) Committed a serious breach of any of the provisions of the contract
4) Director is negligent

Question 10

Execution

Answer 10

Executed as a deed by company and signed as a deed by director