A director of a company is an appointed or elected person of the company who, along with the other directors, if any, are responsible for the implementation and direction of company policy. In essence, it is usually the shareholders who appoint the directors of the company and directors act as agents of the company. It is common to seek reelection to the board, usually at the annual general meetings. Directors’ remuneration are also determined by shareholders. Shareholders can also choose to remove a director.
A director does not have to be a shareholder of the company even though in certain cases, directors may also be the shareholders. The directors act on the basis of resolutions made at directors’ meetings and their authority and powers are derived from the Companies Act and the Constitution of the company.
As agents of the company, directors can bind the company to valid contracts signed with third parties. These third parties may be buyers, lenders and suppliers.
Directors act as trustees for the company and even though they are agents of the company, they may be sued by shareholders if they do not act in the best interests of the company. If they uphold their fiduciary duties as directors and act in accordance with how they should act as spelt out in the Companies Act and the Constitution of the company, then they cannot be held liable for the debts and liabilities of the company.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
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