Types of Directors
Executive
A director who is also an employee
True or False: Directors must act in best interest of the shareholders
False. Best interest of company
What is the minimum number of directors required for a public company
3
True or False, a company can choose not to hold a director liable for wrongdoing
False
Non-executive
Are not employee of the company
True or false: an agreement entered into where the director does not disclose their personal interests is invalid
True. However, can be ratified by shareholders or upheld by the courts
Name one way a person can cease being a director.
Resignation, fixed term expires, declared delinquent, person incapacitated, ex officio no longer holds office, removed by shareholders, under probation and conditions do not allow, becomes ineligible or disqualified
Give 1 function of a Board of Directors
to give strategic direction to the company,
approve policy and planning that gives effect to the direction so provided,
oversee and monitor the implementation and execution by management, and
ensure accountability for organizational performance by means of, among others, mechanisms of reporting and disclosure
Ex-Officio
A person who holds office as a director of a company solely as a result of that person holding another office or title or status
Describe the subjective test for the requirement for a director to act with care, skill and diligence.
Takes into account the general knowledge, skill and experience of the particular director
Name one way a person can be ineligible to become a director.
Juristic person, unemancipated minor, does not satisfy requirement in MOI
True or False: Public companies are only required to have an audit committee if it is stipulated in their MOI
False. Public Companies and State Owned Companies required to have audit committee
Alternative Director
A person elected or appointed to serve, as occasion requires, as a member of the board of a company in substitution for a particular elected or appointed director of that company
True or a false: a director with a personal interest in a matter may NEVER execute any document on behalf of the company in relation to the matter
Name one way a person can be disqualified from being a director
prohibited by law, unrehabilitated insolvent, prohibited by public regulation, convicted for theft/fraud/forgery/perjury, disqualified by MOI
According to section 218 of the Companies Act, 2008, who can institute actions against whom?
Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention
MOI Appointed
MOI can prescribe how and by whom such a director is appointed
Describe the Business Judgement Test
1. Must take reasonable steps to be informed
2. No material personal financial interest (or must disclose)
3. Believed it was in the best interest of the company
Name one party that can apply to have a director declared a delinquent
a company
a shareholder
a director
a company secretary or prescribed officer of a company
a registered trade union that represents employees of the company
any other representative of the employees of a company
the Commission
the Takeover Regulation Panel
Name one instance where the requirement to disclose personal interest in a matter to be considered does not apply
to a decision that may generally affect all the directors of the company in their capacity as directors
or a class of persons of which a director is one
a proposal to remove that director form office or
to a company or its director, if one person holds all the beneficial interests of all the issued securities of the company and is the only director of that company