FUCULTY OF COMMERCE

NAME: NYASHA FREDDY

SURNAME: MUDAPAKATI
REGITRATION NUMBER: B1953680
DEGREE PROGRAM: BACHELOR OF ACCOUNTANCY HONOURS DEGREE
COURSE: COMPANY LAW BS 109
LECTURER: MR 0. F NGWENDE, MR R. MASINIRE & MISS R. CHIRUME
ASSIGNMENT 3
QUESTION 1

a) Directors and shareholders have different roles in a company. Discuss their roles?

ANSWER

The directors are effectively the agents of the company, appointed by the shareholders to

manage its day-to-day affairs. Their roles are determining and implementing policies and
making decisions, directors are what l may call bosses of a company and the right
implementation of policies lies within them since they are the one who knows in which
direction the company is heading. Preparing and filing statutory documents with the
Companies Office or other agencies. Calling meetings, including an annual meeting of
shareholders. Maintaining and keeping records. One of the primary duties of directors is to
act in bona fide in the best interest of the company, this duty is of utmost importance since
directors owe no duties to the shareholders, but to the company itself, they are bound to their
companies by fiduciary duties. This duty to act in bona fide can never be stressed enough.
Their personal interests must never be included in the administration and management of the
company. A Director shall not make a profit from his/her position and must always place
their personal interests aside so not to conflict with those of the company. Directors are held
accountable for any act or omission that results from their actions or actions of any of their
delegates and are liable, jointly and severally, for any inappropriate performance or any
breach of a duty assigned to them. The Companies Act imposes an obligation on Directors to
perform their duties with a degree of care, diligence and skill. The shareholders of
any company have a responsibility to ensure that the company is well run and well managed.
They do this by monitoring the performance of the company and raising their objections or
giving their approval to the actions of the management of the company. The shareholders of
any company have a responsibility to ensure that the company is well run and well managed.
They do this by monitoring the performance of the company and raising their objections or
giving their approval to the actions of the management of the company. Whereas many
shareholders act through institutional and large investors as their representatives, minority
shareholders have the option of expressing either their disapproval or agreement at the
Annual General Meetings of the companies. Roles of the shareholders In
general, shareholders have little power over the directors and how they run the company.
Their main role is to attend meetings and discuss whatever is on the agenda to ensure the
directors do not go beyond their powers – and provide shareholders' consent where required.
 b) Differentiate executive from non executive directors.

ANSWER

An executive director is a member of the board of a firm (or a non-profit organisation) who
also has management responsibilities. A non-executive director (NED) is a board member
without responsibilities for daily management or operations of the company or organisation.
The executive director role is important because it ensures that the rest of the board receives
an accurate representation of management and operations. A non-executive director is not an
owner or a member of the family of a corporate owner. The essential characteristic of
an executive director is his or her discharge, usually as an employee,
of executive functions in the management and administration of the company. Non-executive
directors are usually independent of corporate management. It is the job of the executive
director to be knowledgeable of the newest developments in the field to keep the organization
on the cutting-edge of the newest trends. Job responsibilities of an executive director include,
encouraging others to join the board and have a say in the strategy that is created. Publishing
memos and newsletters that inform the community on the activities of the company.
Preparing a budget that reinforces the priorities and values. Ensuring that the organization
conforms to federal and state regulations. Job responsibilities of a non-executive director
include, ensuring that the employees are receiving continued professional development.
Sitting on subcommittees to gain a sense of the wider company and the needs of the
employees. Negotiating and approving the appointment of chief executives, executive
directors and other leaders. Meeting with other non-executives.

c) How may directors be removed before the expiry of their term of office.

ANSWER

A company may remove a director before the expiry of the term of his office by passing an

ordinary resolution and after giving him a reasonable opportunity of being heard. Directors
can be removed if has been convicted of any offense involving moral turpitude or otherwise,
and sentenced in respect thereof to imprisonment for six months or more by a court and a
period of five years has not elapsed from the date of expiry of a sentence. However, a person
is ineligible to be appointed to any company if, has been convicted of any offense and was
sentenced to imprisonment for a period of seven years or more. Where notice of a resolution
to remove a director has been given under this section and the concerned director makes a
representation in writing to the company and requests its notification to members of the
company, the company shall do so, if the time permits, The Company shall state the fact that
the representation has been made by the director concerned, in any notice of the resolution
given to members of the company. A copy of the representation is required to be sent to every
member of the company to whom notice of the meeting is sent, and if the company is unable
to send the same because of insufficient time or default, the director has the right to be heard
orally, required that the representation shall be read out at the meeting. Has been convicted of
the offense dealing with related party transactions under section 188 in the preceding five
years.

d) Under what circumstances in terms of the companies act are directors held personally
liable instead of company?

ANSWER

It is the duty of directors to see that a company keeps within its corporate powers and obeys
the law.1 Any intentional deviation or departure from these duties to the substantial injury of
the company and its shareholders constitutes will full mismanagement as a matter of a law for
which a court of equity has jurisdiction to call them to account.2 3 Where the directors of a
company are guilty of a breach or neglect of any duties owing by them to the company and
the proximate result of such breach or neglect of duty is a. loss to the company, they are
liable to it. Directors are liable for any breach of their duty with respect to the capital and
assets of the company. However, where directors have not profited personally by their bad
management or appropriated any property of the company to their own use, Courts of Equity
treat them with indulgence. It was laid down in Lagunas Co v. Lagunas Syndicate,10 that if
directors act within their powers, if they act with such care as is to be reasonably expected of
them having knowledge and experience and if they act honestly for the benefit of the
company they represent, they discharge both their equitable as well as the legal duty to the
company. The directors may be liable to the company in the following cases, Negligence,
Breach of Trust, Malafide acts or Misfeasance and Directors Liability regarding irregular
Allotment of shares.
REFERENCES
1. Company law club at https://www.companylawclub.co.uk/removal-of-a-director-
from-office retrieved on 16 may 2020.
2. Company register at https://companies-register.companiesoffice.govt.nz/help-
centre/company-directors/what-it-means-to-be-a-director/ retrieved on 16 may 2020.