Please enable JavaScript.
Coggle requires JavaScript to display documents.
WS4- directors - Coggle Diagram
WS4- directors
structure
Directors are responsible for day-to-day management and are accountable to the company itself rather than shareholders directly
Directors’ power is derived from the articles (MA states directors are responsible for management of companies business, for which purpose they may exercise all powers of the company)
MA4 protection from rogue directors: shareholders may, by special resolution, direct the directors to take or refrain from taking specified action
-
-
types
Director at law
-
de facto- Someone who assumes the role of director but has not been validly appointed. No formal test for this but Smithton Ltd v Naggar shows you can look at if their acts are directional in nature, looking at cumulative effects of what they have done, look at whether company considered them a director as well as what third parties considered them to be (question of fact)
shadow director- a person (usually a shareholder) tries to exert influence over the board without being appointed as a director, in effort to avoid the duties imposed on directors
S251(1) CA 2006 defines as a person in accordance with whose directions or instructions the directors of a company sre accustomed to act. (2) states professional advisers are not included in this unless the conduct of an advisor goes beyond the scope of professional advice and they end up controlling the companies affairs as in Re Tasbian Ltd
Re Hydrodam Ltd- to establish a shadow director, you have to prove: 1. the identity of the formally-appointed directors of the company 2. That the person in question directed those formally appointed directors as to how to act in relation to the company's affairs 3. Those directors acted in accordance with that person's directions and 4. The directors were accustomed to act in that matter (question of fact in every case)
Secretary of State for Trade and Industry v Deverell- where shadow directors cause de jure directors to cast themselves as subservient or surrendered to their respective discretions then there are shadow directors
Ultraframe (UK) Ltd v Fielding- strong influence does not necessarily mean there is a shadow director. Governing majority of the board are accustomed to act in accordance with the directions of the alleged shadow director
why it matters at law: de facto directors have the same fiduciary duties and liabilities in insolvency as de jure directors. Shadow directors- most provisions in CA 2006 and Insolvency Act 1986 apply equally to shadow directors
Directors in practice- executive (also an employee), non executive (not an employee and do not take part in day-to-day management of the company)
A white paper clarifies a company could have a corporate director if it is registered in the UK and all directors of the corporate are natural persons
-
S154 CA 2006 a private company must have at least one director, a public company must have at least two. There is no max number of directors but a company can put this in their articles
S157 CA 2006- director must be at least 16 years old (or if appointed before, it is not effective until they turn 16)
appointment, removal and disqualification
Appointment is governed by company's articles, MA Art 1791) any person who is willing to act as a director and is permitted by law to do so may be appointed
-
-
-
-
termination
Resignation- a director may resign at any time by giving notice (unless articles state otherwise)- Glossop v Glossop. Usually this does not need to be accepted by the board
Vacation- MA18 provides a director is deemed to vacate the office where that person becomes prohibited from being a director, bankrupt, subject to a composition order made with creditors or physically or mentally incapable for more than 3 months (stated by registered medical pratititioner)
-
-