Directors: Nature of Office and Roles Flashcards
Why do companies need directors?
A company is an artificial legal entity, therefore it needs human agency to run the business.
What are the types of director?
Executive directors - Normal director running part of the business, usually an employee
Non-Executive Directors - Usually an ‘outside’ or independent director.
What is a shadow director?
This is not a specific director, but refers to anyone who performs the duties and functions of a director, even if not appointed.
How are directors appointed?
On company formation
By the board
Ordinary resolution by members
Who can be a director?
Virtually anyone, unless the Articles restrict it, or person is under 16/disqualified from being a director.
How do members exercise power over directors?
Per CA 2006, they can vote them off the board at any time, for any reason
What is a service agreement? What is the maximum term?
Contract of employment for Director, if they are also an employee
2 years maximum (can be longer with member approval)
What happens if a director is fired?
Still have to pay them per the service agreement terms.
Firing a director doesn’t mean employment is terminated and vice versa. Employment rights always protected.
What does the law say about remuneration?
Not much - Only provide for directors to be paid whatever the company determines by resolution.
Can fired directors be paid a ‘golden goodbye’?
Yes, they are allowable if:
Shareholders have given consent or
Contractual entitlement or as damages/settlement
What are the officers of a company?
Chairman
Managing Director
No obligation to have these, and won’t have special powers unless conferred by the Articles.
What are the usual duties of a Company secretary and are they compulsory?
Compulsory for public companies
Returns to the Registrar
Organising meetings and arranging minutes
Dealing with matters relating to issue of shares, dividends
Ensuring company law is observed
