Law Lecture - comany directors

Question 1

Name and describe different types of directors

Answer 1

Executive - permanent officers - Specific role in every day operational management

Non-executive-not engaged in the daily operational management.-involved in board level governance-monitors

De facto -Informally appointed-helf out by company-liable like directors

Shadow-in accordance to directors,who directions and instructions as they way they are supposed to act

Manging - overall responsible-running of business

Question 2

How is a Director Appointed ?

Answer 2

appointed by the initial members.

Subsequently directors are appointed by shareholders at a general meeting

Directors may appoint new directors and they will hold office until the next AGM

Must inform CRO within 14 days when changing directors

Question 3

How are directors removed ?

Answer 3

May Vacate
* Resignation
* Retirement/rotation

Must Vacate
Disqualification Order imposed
* Becomes bankrupt
* Fails to acquire requisite qualifying shares
* Becomes of unsound mind/incapacitated
* Resigns in writing

Question 4

Explain the Removal Procedure

Answer 4

Resolution at GM – ordinary resolution required
Extended Notice – 28 days
* Copy to Director – Copy of resolution ,shwoing removal of director
Written Representations – director has a right to make written representations,anf has them set out before gm
Read out – if not circulated before hand they must be read out at the GM
* Right to Speak – director concerned has the right to speak at the GM

Question 5

Explain the term Restriction of directors

Answer 5

Prevent phoenix Trading

Restricted as being a director -5 years

Application made to the DOCE.Liquidator or reciever

Question 6

Explain the term Acting while Restricted

Answer 6

May still act as a director/secretary

Must notify the ocmpany before starting

Breach = personal liability -pay for the companies debts

Category 2 offence

Question 7

Describe disqualification of directs

Answer 7

Disqualifcation can happen todirectors, auditors, company officers, liquidators, receivers.

No activity in promotion,mangement or formation -5 years

Automatic :
Offense under compnaies act 2014

Evidence of dishonely or fraud

Acting while restricted

Question 8

Why does a court order disqualifications of directs ?

Answer 8

• Guilty of fraud
• Guilty of breach of duty
• Guilty of fraudulent or reckless trading
• Unfit by reason of past conduct,
  Disqualified in another state

Example : DOCE V LACEY 2011

Question 9

List the fiduciary Duties

Answer 9

1. Act in good faith with best interest of the company
2. Act honestly and responsibly
3. Exercise powers for proper purposes
4. Not to use company property, information, or opportunities for own benefit
5. Maintain independent judgement
6. Avoid conflicts of interest
7. Exercise reasonable skill and care

Question 10

Explain the term Good faith and best interest

Answer 10

Court will consider whether or not the director believed his/her action would benefit the company
EXAMPLE :
Clarke v Workman (1920)

Question 11

Explain the term Exercise powers properly

Answer 11

Directors allotted shares for an improper purpose not in best interest of the company

EXAMPLE :Nash v Lancegaye Safety glass (Ireland) (1916)

Question 12

Explain the term Using company property for personal benefit

Answer 12

expressly permitted by the company’s constitution
approved by a resolution of the company in general meeting

Question 13

Explain the term Avoiding conflict of interest

Answer 13

Avoiding conflicts of interest

EXAMPLE=Aberdeen Railway Company v Blaikie Brothers (1854)

Question 14

Explain the term Maintaining independent judgement

Answer 14

Money in return for undertakings in relation to an application by the Council for a compulsory acquisition of defendant’s property

Question 15

Explain the term Skill and Care

Answer 15

To a standard that is reasonably expected from a person of his/her knowledge and experience

Can delegate to management provided that it is normal practice

Question 16

Explain the term Penalties of Breach

Answer 16

Liable to account to the company for any gain made directly/indirectly from the breach of duty
Indemnify the company for any loss/damage arisin

Question 17

List other statutory duties

Answer 17

Duty of Compliance -with the Companies Act 2014.
End of year compliance statement
acknowledge responsibility for ensuring corporate compliance confirm that compliance policy statement is in place
confirm that structures are in place to secure compliance confirm a review of these structures
Duty towards employees - have due regard to the interests of employees in the exercise of the performance of their duties
Duty to declare interests – in contracts or proposed contracts
Duty to disclose interest in shares –

Question 18

Explain the term Proper books of accounts

Answer 18

Must take all reasonable steps to ensure that the company maintains proper books of accounts
True and fair view of the affairs of the company

Question 19

Explain th term Must take all reasonable steps to ensure that the company maintains proper books of accounts
True and fair view of the affairs of the company

Answer 19

A copy must be maintained by the company
May not be granted a contract exceeding 5 years that cannot be terminated by reasonable notice or may only be terminated in specific circumstances UNLESS approved by ordinary resolution at a GM
No approval = void
Also need approval of members to make payments to directors or directors dependents for the loss of office
Must disclose payments made to him/her for transfer of his/her shares in the company.