Unit 15 - Corporate governance (directors) Flashcards
What are the roles of directors ?
- They are operational and strategic.
- Commercial role.
- Health of economy.
What is the minimum number of directors required ?
- One director for private or personal liability company.
- Three directors for public and non-proft companies.
Can directors be renumerated ?
- Directors may be remunerated, unless the MOI says otherwise.
- Remuneration should be approved by a special resolution within the past two years.
What is the difference between an executive, non-executive and independant director ?
- Executive is involved in day to day, full time salary employees and are operational and strategic.
- Non-executive is not involved in the day to day, not employees and role is to give objective judgement and advise.
- Independent is the same as non-executive, no relationship with company.
Discuss the election and appointment of directors.
- A director is elected by Shareholders entitled to vote.
- MOI may provide for appointment of directors.
Discuss the removal of directors.
An elected director may be removed by an ordinary resolution adopted at a meeting of Shareholders, despite anything to the contrary in the MOI, company rules, agreements.
What are the procedural requirements for removal of directors ?
- Receive notice and resolution.
- Be given an opportunity to make a presentation.
Are the shareholders required to give reasons for the removal ?
The principle is that both parties have the right to be heard.
Zulu case.
Discuss removal by other directors.
Where there is more than 2 directors in a company and a Shareholder or director has alleged that a director has become ineligible or disqualified; incapacitated; or has neglected in the performance of their functions as a director; then the board must determine the matter by resolution and is
permitted to remove the director concerned.
What if there are less than 2 directors in a company ?
Removal by directors.
Director or Shareholder may apply to Tribunal for determination of matter.
When is a person regarded as ineligible from acting as a
director ?
- Is a juristic person.
- Is an unemancipated minor (or similar legal disability).
- Does not satisfy the qualification set out in the MOI of the company.
When is an eligible person disqualiffied from acting as a director ?
- Has been prohibited from being a director by a court.
- Has been declared a delinquent in terms of section 162 of the Act or section 47 of the Close Corporation Act.
In what other instances is a person also disqualified subject to section 69(9) - (12) ?
- An unrehabilitated insolvent.
- Is prohibited in terms of a public regulation from being a director of the company.
- Has been removed from an office of trust on the basis of misconduct that involves dishonesty.
- Has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or fined above the prescribed amount for certain offences.
How are vacancies filled ?
- New appointment.
- Next AGM.
- Within 6 months at a Shareholder meeting called for this purpose.
Discuss the significance of meeting minutes.
- Evidentiary value.
- Make note of resolutions that had been adopted in previous and current meeting.
- Records declarations of conflicts of interest.
- Should be kept for seven years.
