WEEK 4 Flashcards
Lecture 4
What’s a Director?
Any person occupying the position of director by whatever name called - CA06.
What is being a director determined by?
Someone’s function (what they do) and not their title.
What’s a De Jure Director?
A person who is formally and legally appointed to the board of directors, in accordance with the Articles.
What’s a De Facto Director?
A person not formally appointed to the board, but who carries on the role and function of a director
What’s managing director?
Director that does the day-to-day.
- Also has authority to enter into all contracts.
What’s a Shadow Director?
‘A person in accordance with whose directions or instructions the directors of a company are accustomed to act’: s.251 CA06
- N/A if advice only given in professional capacity e.g. lawyer, accountant
What’s an Exec Director?
Full time employee involved in the management of the company.
- Usually distinguished by special title: ‘Sales Director’, ‘Finance Director’, ‘Operations Director’ etc
What’s a non-executive director (NED) ?
- Usually part time and not employed
- Perform corporate governance function – bring expertise and independent judgement to the board.
- Subject to same duties and controls as executive directors
What’s the Chair of the Board?
- Person who performs corporate governance function, spokesman and chairs board meetings + has a vote.
What’s a Chief Executive Officer (CEO) ?
Person responsible for strategic leadership + develops strategy and recommendations and responsible for company performance.
What’s an Alternate Director?
Person appointed by director to attend and vote on their behalf.
Can be another director or an outsider.
How does someone become a Director?
The first Directors of a company are appointed in the Statement of Proposed Officers.
How many directors do Plcs need to have?
At least 2 Directors.
How many directors do Ltds need to have?
At least 1 Director.
What contracts do Director’s usually have?
Fixed-term contracts.
How are Directors removed via resolution?
With an ordinary resolution of shareholders with special notice (s.168 CA06).
What if a director is removed before the expiration of fixed term contract?
Tantamount to wrongful dismissal and the director will be potentially be entitled to damages.
What’s the procedure to remove Directors by Ordinary Resolution?
Special Notice of General Meeting
- Minimum 28 days before
Company must forward the notice to the Director concerned.
Company must properly notify shareholders.
Director must be given opportunity to write to shareholders.
Ordinary Resolution
- Meeting according to Article + 50% majority to remove Director.
What happens when a Director is also a shareholder?
They may have weigthed voting rights in the Article for protection
Name 2 ways Directors may be removed according to model articles
- Made bankrupt
- Physically/Mentally incapable - 3 months extra as certified by medical practitioner
- Subject to a court order
- Resigns
What does the company directors act 1986 state?
The CDA86 allows the courts to disqualify someone (i.e. ban them) from being a director, or taking any position of management in a company for up to 15 years.
Name the 3 categories for director disqualification
- General misconduct
- Disqualification for unfitness
- Other reasons (fraudulent trading)
What happens if a director breaches the disqualification order?
- It’s a criminal offence punishable by fine/imprisonment
Veil of incorporation is lifted - the disqualified director + underlings are liable for debts of the company while so.
What’s the difference between shareholders and directors?
Directors = Manage
Shareholders = Control
