Lecture 10 on Directors

Directors persons vested with powers to manage company. Types of directors: Executive director appointed as a director and holds an executive position in the company on a full-time basis. Non-executive director appointed as a director but does not devote his full-time attention to companys affairs. Shadow director not appointed as a director but on whose instructions the appointed directors are accustomed to act. Appointment of Directors On registration of the company. Subsequent directors are appointed by the shareholders. Removal of Directors (a) by articles e.g., insanity and bankruptcy. (b) Courts if director is unfit to be involved in the management of the company; (c) Rotation 1/3 of plc directors lose office at the end of each year so they have to be reappointed in the AGM; (d) shareholders. Members have a statutory right to remove directors from office by ordinary resolution (s.168), even though the directors have not done anything wrong.

Duties of directors: s.171 to act within their powers s.172 to promote the success of the company s. 173 to exercise independent judgement

s.174 to exercise care and skill in managing the company s.175 to avoid a conflict of interest e.g., not to make secret profits for themselves at the companys expense. s.176 Not to accept benefits from third parties. Can only keep such benefits if the shareholders allow them to do so. s.177 to disclose their interest in any transaction in which the company is a party.