| Directors
|
| |
| 1.
General |
| A
private company must have at least one director. A public
company registered on or after 1 November 1929 must have
at least two directors. |
| Every
company must have a secretary and a sole director may
not also be the secretary (s283 CA 85). |
| A
company may be a director of another company. |
| Notice
of the appointment of a director must be given to the
Registrar of Companies on Form 288a within 14 days. |
| On
the resignation, removal or retirement of a director,
notice must be given to the Registrar of Companies on
Form 288b within 14 days. |
| Notice
of any change in the particulars of a director must be
given to the Registrar of Companies on Form 288c within
14 days of the change. |
| The
following persons may not be a director of a company:- |
| (i) |
an
undischarged bankrupt |
| (ii) |
a
person who is also the company’s auditor |
| (iii) |
a
person who is the subject of a disqualification order |
| (iv) |
a
person who is of unsound mind |
| (v) |
if
the company is a public limited company, someone who is
over the age of 70 unless shareholder approval has been
obtained |
| (vi) |
a
person under the age of 18. |
|
| |
| 2.
Retirement |
| Table
A provides that a portion of the directors shall retire
by rotation at each AGM (see Regulations 73 to 80 1985
Table A) and similar provisions may be incorporated in
the Articles when Table A is not adopted. If Table A has
been adopted, many private companies exclude these provisions. |
| Note:
if the company's Articles require the directors to retire
by rotation and the company is going to pass an elective
resolution dispensing with the need to convene AGM's it
is suggested that the Articles be changed to remove such
a requirement before or at the same time as the elective
resolutions are proposed. |
| On
the retirement or the non reappointment of a director
notice must be given to the Registrar of Companies on
Form 288b within 14 days. |
|
| |
| 3.
Age Limit |
| Except
in certain circumstances, a director must vacate office
at the conclusion of the annual general meeting commencing
next after he attains the age of 70 (s293 CA 85). This
rule is subject to the following: |
| (i) |
the
rule applies only to public companies and to private companies
which are either subsidiaries of public companies or registered
in Northern Ireland as public companies; |
| (ii) |
no
provision for automatic reappointment will apply, and
if at the meeting at which he retires the vacancy is not
filled it may be filled as a casual vacancy; |
| (iii) |
the
rule will not apply if the director's appointment is or
was made or approved by the company in general meeting.
Special notice is required and the notice to and by the
company must state or must have stated the age of the
relevant person; |
| (iv) |
a
person appointed or proposed to be appointed a director
subject to s293 CA 85 is obliged to inform the company
if he has attained the age of 70 or any other retiring
age under the company's Articles (s294 CA 85). |
|
| |
| 4.
Removal |
| A
company may by ordinary resolution remove a director before
the end of his period of office notwithstanding anything
in its Articles or in any agreement between the company
and the director (s303 CA 85). |
| Removing
a director under s303 CA 85 will not deprive him of conpensation
or damages payable in respect of the termination of his
appointment as director or any other appointment terminating
at the same time. Therefore, legal advise should always
be sort before removing a director. |
| Special
notice is required of any resolution to remove a director
or to appoint somebody instead of him at the meeting at
which he is removed. |
|
| |
| 5.
Disqualification |
| Certain
individuals are disqualified under the Company Directors
Disqualification Act. A public register of disqualification
is kept at the Companies Registration Office. |
|
| |
| 6.
Substantial Property Transactions Involving Directors
(s320 CA 85) |
| A
company must not enter into any arrangement with a director
(or a person connected to him) which would result in the
director acquiring from the company or the company acquiring
from a director (or a person connected to him) non-cash
assets of the company, unless the arrangement is first
approved by an ordinary resolution of the members of the
company and, if the director is also a director of its
holding company, by an ordinary resolution passed by the
members of the holding company. |
| This
restriction does not apply when the value of property
is below £2,000 or, if over £2,000 does not exceed either
£100,000 or 10% of the value of the company's net assets. |
|
| |
| 7.
Loans to Directors (s330 CA 85) |
| A
company may not make a loan to a person who is: |
| (i) |
a
director of the company or; |
| (ii) |
a
director of its holding company. |
| In
addition, a company may not enter into any guarantee or
provide any security in connection with a loan made by
any person to: |
| (i) |
a
director of the company; or |
| (ii) |
a
director of its holding company |
| Guarantee
is defined to include an indemnity. Certain indirect arrangements,
such as assignments of loans or back to back loan transactions,
which result in a director obtaining a loan or guarantee,
are also prohibited. |
| A
public company, or a private company which is a member
of a group including a public company, is subject to the
following additional prohibitions: |
| (i) |
The
prohibition on loans and guarantees is extended to include
'quasi-loans' and 'credit transactions'. A quasi- loan
is a payment to a third party on behalf of a director
on terms that the borrower will be liable to reimburse
the creditor. |
| (ii) |
Restrictions
are extended to apply not only to transactions entered
into with or for a director, but also transactions entered
into with or for a wide circle of persons 'connected with'
that director. |
| There
are certain limited specified exceptions to this prohibition,
relating to transactions with directors of subsidiary
or sister companies, loans up to £5,000, director's expenses,
intra-group transactions and, in the case of public companies
or private companies which are members of a public group,
short term quasi-loan up to £5,000 and certain permitted
credit transactions (s330 to s342 CA 85). |
|
| |
| 8.
Interest in Contracts |
| The
general requirement is that a director may not contract
with his company, or have an interest in any contract
with such a company without the approval or ratification
of the general meeting. This general rule is usually relaxed
by the company's Articles of Association (Regulation 85
of 1985 Table A) which usually exempts the director from
this restriction if disclosure is made to the board in
accordance with s317 CA 85. S317 CA 85 requires a director
to disclose that he is interested in a contract or proposed
contract and to state the nature of his interest either
at the meeting at which the question of entering into
the contract is first considered or, if he was not interested
at that time, at the next meeting after he became interested.
Case law has held that a sole director is still under
an obligation to disclose his interest to himself. |
| Note
Regulations 94 and 95 of 1985 Table A prohibit a director
from voting and being counted in a quorum where he has
an interest in the matter under consideration. |
| Where
a director has disclosed an interest, it should be stated
in the Board Minutes that he has disclosed his interest. |
|
| |
| 9.
Interest in Shares or Debentures |
| When
a person becomes a director of a company and at that time he
(or a person connected to him) is interested in the shares or
debentures of the company he must notify the company of the
details of his interests. In addition, while he remains a director
of the company he must notify the company of the details of
any change in those interests (s324 CA 85). |
| The
company must keep a register of directors’ interests pursuant
to s325 CA 85. |
| |
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