Directors in a Company

Study Notes

Meaning of Director

• A director is a member of the board of a company, including alternate directors, as contemplated in s 66. • The board of directors has the authority to exercise all powers and perform functions of the company, except as otherwise provided in the Act or Memorandum of Incorporation. • A director includes any person occupying the position of director or alternate director, by whatever name designated.

Types of Directors

• An ex officio director holds the position solely as a result of holding another office or title or status. • An MOI-appointed director does not have to be appointed by shareholders. • An alternate director is elected or appointed to serve in substitution for a particular elected or appointed director. • An elected director is elected by shareholders, with at least 50% of directors in a profit company being elected by shareholders. • A temporary director can be appointed by directors, unless the MOI provides otherwise.

Board Composition

• The board should consist of both executive and non-executive directors, with non-executive directors being the majority. • Executive directors are employees of the company, whereas a director does not have to be.

Directors and Managers

• A manager is not necessarily an employee of a company, whereas a director does not have to be. • The main differences between directors and managers relate to leadership, decision-making, duties and responsibilities, and relationship with shareholders.

Functions of the Board of Directors

• To give strategic direction to the company. • To approve policy and planning that gives effect to the direction provided. • To oversee and monitor the implementation and execution by management. • To ensure accountability for organisational performance through reporting and other mechanisms.

Executive and Non-Executive Directors

• A director who is also an employee is referred to as an executive director. • Non-executive directors are not employees of the company. • Differences between executive and non-executive directors include leadership, decision-making, duties and responsibilities, and relationship with shareholders.