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Companies - Directors and officers - Coggle Diagram
Companies - Directors and officers
Appointment
Procedure for appointing new directors
by ordinary resolution of the shareholders or decision of the directors.
Notice of change
Change= NOTIFY CH in 14 days of new D appointment// or other changes
Difference between the directors needed in private companies and public companies
Types of directors
De jure Directors
Formally appointed and registered with CH. P, needs only 1 dejure director , public companies need 2
De facto directors
Not appointed, but carries out duties
Shadow directors
influence, company directors
Advising in professional capacity excluded as SD
Executive and non- executive directors
Alternative directors
appointed to attend meetings
Nominee directors
Appointed by a shareholder// a dejure director
What are directors? - Agents of the company
Authority
Actual
Granted by a resolution or articles
Apparent or ostensible authority
A third party would reasonablly belive that the agent would have the authority
Since directors has no power to bind the compnay except when the director acts a board , this would come about through past dealings
Execution of contracts and documents
company can enter into a contract though seal or authoirzed person, Com can excute document by thier signature of 2 directors or director and sec, or single director in presence of a witness who attests the sign
director will have authority to do whatever a director ordinary would have authority to do
Rights to compensation and expenses
Any director's Service contract is being agreed - cannot count in the quorum // MA expenses, and compensation
Powers of directors
decision makers
Needing shareholders approval
Decisions reserved to shareholders
for example a transaction that a director has an interest in
service contracts of over 2 years
powers are confirmed by the articles of association
Must act as a board (collective) can delegate powers
Duties of directors - shareholders can ratify breach through OD resolution
Fiduciary duties (good faith and best interest of the company)
Provision protecting liability
Any provision in the article or contract that exempts the director from inability, where he would have been in breach is void
.
Company can get insurance of liability for that director, or indemnify director from liability from a thirds party - can not be used from criminals or reg fines
liability may extend beyond term (previously)
Duty to act within powers (with the companies constitution)
Duty to promote success of the company parliament concept (
enlightened shareholder
value)
Consequences of any decision long term
Interest of the company's employees
The impact of the company's operation to the environment
desirability of the company to maintain a reputation for high standards of business conduct
the need to act fairly as between members of the compnay
Duty to the compnay shifts to creditors when the company goes is insolvent or about to. .
Duty to exercise reasonable care, skill and diligence
(judged differently)
Objective test
- general knowledge and skill and experience that may reasonably be expected of a person carrying out function
Subjective test -
general knowledge and skill and experience
Duty to exercise independent judgment
Not breeche if requesting advice, important the director reaches decision himself
Duty to avoid conflicts of interests
Secret profits (unauthorized profits from the company)
both conflict of interest and secrets profits can be authorized by the directors
direct or indirect interest - to be avoided
EXCPETION
NO BREACH
a transaction with the compnay itself and the board knows the directors interst
the situion cannot reasonably be regarded as giving conflict
the matter has been authorized by the directors
Duty not to accept benefits from third parties
Must Give other directors Notice - can be any form of notice
Not counted towards the quorum - Under MA
Exceptions - do not need to declarer, not reasonable to regard as a conflict
Loans to directors
Has to be approved by the other D/ can be a guarantee
Duty to declare interest in proposed or exciting transaction/ arrangement
Exception: if benefit cannot reasonably be regarded as likely to raise a conflict
Board meetings
Calling a meeting - reasonable notice
Contents of notice - no need to be in writing must give date, time loc ect, told before the meeting
Electronic meeting - allowed, needs to be communicated to the others
Quorum - no less than 2 MA
Written resolutions - all directors must approve it
Removal and disqualifications of directors - power shareholders OR
Powers usually not be override
powers may be limited by clause (BUSHELL V FAITH)
Gives weighted voting rights to a director who is also a shareholder in event of removal of director
triggering contract rights
Compensation payment - due to termination of service contract
28 DAYS notice // directors has right to speak at the meeting
give 28 days notice to the D before the general meeting
Disqualification
Misconduct in connection with companies
Conviction of indictable offence, IN connection with promotion, formation. management, liquidation or staking off a compnay
persistent breaches
Freud, Fraudulent training
summary convictions - failure to compnay with accounts doc to CH
Unfitness
2/15 years for being unfit
Can be disqualified for wrongful training under insolvency
Retirement by rotations - public companies
PLC MA first annual general shareholders meeting all directors must retire form office (rotation)
Company Secretary P
Qualifications
head office for at least 3 years of the 5 years immediately precleaning this appointment as secretary
be member of list of accountancy/secretarial
a barrister,/ sol admitted
Powers and duties
books and record keeping and filling
Compnay auditors
prepare accounts
Large company auditors
smaller company turn over less than 10 million and no more than 50 employees no need