- King III Report - Corporate Governance
- King III - Audit Committee
- Short Notes on The New Companies Act
- The New Consumer Protection Act
DIRECTORS: WHO ARE THEY? WHAT ARE THEIR DUTIES & RESPONSIBILITIES?
There is no precise definition of the term “director” but it can loosely be interpreted as the following: Directors are the human “agents” of the company; they are the legally accountable custodians of the company.
The Companies Act (Act 61 of 1973) makes no distinction between executive and non-executive directors. They all remain equally accountable for the proper conduct of the company’s affairs. In practice however there is a distinction between executive and non-executive directors. Executive directors are permanently employed by the company and are directly involved in the day to day running of the company. Non-executive directors are not permanently employed by the company and are not part of the day to day management of the company.
Directors have certain duties which can be found in various acts, as well as the common law and the memorandum and articles of association of the company.
Every director is bound by the common law and has a distinct fiduciary duty (the term ‘fiduciary’ being derived from the Latin ‘fiduciarius’ meaning ‘of trust’). Thus the directors are in a trust position towards the company. The fiduciary duty gives rise to the following duties:
- Duty of Loyalty: Conflict of interest, Personal Profits & Confidentiality;
- Duty of Care: Good Faith, Best Interests of the Company & Care;
- Duty of Attention: Attend Meetings, Review Information, Review Board Documentation &Monitor Activities.
The directors also have certain statutory duties:
- To disclose an Interest of Director in a contract;
- Disclosure of Directors remuneration and loan;
- Keep proper Accounting records and Financial Statements;
- To attend Meetings of Directors.
- The directors further inter alia have the following responsibilities, they need to ensure that the Company:
- Trades towards its objectives;
- Trades within the boundaries set by the articles and memorandum;
- Trades within the regulations of the companies act and the common law;
- Trades within the resolutions passed at meetings.
Kindly note that the above lists merely provide a general idea and is not exhaustive.
It is recommended that all directors attend training to ensure that they are up to date with any legislation that might affect their position in the company as it is assumed that the directors know their duties and responsibilities.
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