Week 5 (w/c 30th Oct) - Company Officers Flashcards
who are the officers of a company?
The officers of a company are:
The director(s)
The company secretary (if it has one)
What is a director?
Responsible for the management of the company
Agent of the company
Can bind the company by their acts without personal liability (CA 2006, s40)
who can be a company director?
Anyone not under 16 years of age (CA 2006, s157)
But certain people may be disqualified (CDDA 1986 – see later slide) or the articles may prohibit certain people from being directors
Can have corporate directors i.e. a company can be a director, but there must be a least one living person as a director (CA 2006, s 155)
What is an executive director?
Executive director has management responsibilities within the company (such as managing director, operations director, finance director etc.)
May work full time at a company but not always e.g. corporate directors
If they do work, will have a contract of employment, meaning they are employees of the company
what is a non executive director?
Non-executive director is Not employed by the company
Don’t receive a salary (but may be paid a fee per board meeting, for example)
Role is to check company is being managed properly and ensure high standards of financial integrity
Share the same liabilities as Executive Directors
What is a shadow director?
A shadow director instructs the other directors of the company on how to act
Can be a natural or corporate person. So for example, a parent company may be a shadow director for its subsidiary
A management consultant or a major creditor could also be considered a SD, but not those who give advice in a professional capacity (e.g. an accountant)
What is a defacto director?
De-facto director
Those who are have not been formally appointed as a director (so they won’t be listed on Companies House), but they fulfil the role of a director
Can be difficult to determine whether someone is acting as a director from their tasks and responsibilities in the company
If judged to be a director, will be subject to the same duties and liabilities
what is an alternate director?
Alternate director is If a director is unable to attend a board meeting, they may be allowed to appoint someone to attend and vote on their behalf
It depends on what the articles allow
Usually the alternate director is a fellow director rather than an outsider
Where are the procedures for appointing a new director found?
Procedure for appointing new directors should be stated in Articles
What are first directors?
First directors of a company stated in incorporation documents – no appointment necessary
How are directors normally appointed?
Usually directors are appointed by directors or by simple majority at a general meeting
For public companies how are directors appointed?
For public companies, appointment of directors is to be voted on individually at general meeting (CA2006, s160)
Normally for public companies, the appointment is for a set number of years
Then there is a vote to re-appoint at the next AGM
can a director enter into a contract on behalf of the company?
When a director(s) enters into a contract on behalf of the company, it will be binding on the company
Authority can be explicit or implied (eg. An MD)
Directors may also have apparent authority
What happens when a director breaches their duty?
When a director breaches their duties
Director will be required to make up any losses incurred by the company
Any secret profit gained by a director (e.g. by not disclosing an interest in an arrangement) can be claimed by the company
If more than one of the directors is in breach, the liability is joint and several. So the company can take action against any or all of the directors
what does the cdda 1986 cover?
CDDA 1986 outlines situations that may result in disqualification, such as:
Conviction of serious offence in relation to company
Fraudulent trading on the winding up of a company
Wrongful trading
Consistently failing to comply with company legislation requirements (filing accounts, returns etc)
If a company became insolvent due to directors actions, can be very subjective whether their actions warrant disqualification
