DIRECTORS' DUTIES

s. 128(1) - Meaning of 'directors'
1. includes a person occupying the position of director of the company by whatever name called
2. includes an alternate director
3. does not include a receivers
4. Directors include
  1. a person in accordance with whose directions or instructions a person referred to in s. 128(1) may be required or is accustomed to act
  2. a person in accordance with whose directions or instructions the Board of the company may be required or is accustomed to act
  3. a person who exercises or who is entitled to exercise or who controls or who is entitled to control the exercise of powers which, apart from the constitution of the company, would fall to be exercised by the Board
  4. a person to whom a power or duty of the Board has been directly delegated by the Board with that person's consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the Board
Duty to act with loyalty and in good failth
1. s. 143(c) - exercise their powers honestly in good faith in the best interests of the company and for the respective purposes for which such powers are explicitly or impliedly conferred;
  1. s.160(1)(a) - Every officer of a company shall exercise the powers and discharge the duties of his office honestly, in good faith and in the best interests of the company
2. account to the company for any monetary gain, or the value of any other gain or advantage, obtained by them in connection with the exercise of their powers, or by reason of their position as directors of the company, except remuneration, pensions provisions and compensation for loss of office in respect of their directorships of any company which are dealt with in accordance with s. 159
  1. s. 159 - Remuneration and other benefits
    1. the company shall by ordinary resolution approve the remuneration of the directors and any benefit payable to the directors, including any compensation for loss of employment of a director or former director
    2. the Board may determine the terms of any service contract with a managing director or other executive director
    3. the directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any meetings of the Board or in connection with the business of the company
    4. the constitution may provide that the Board, instead of the meeting of shareholders of a company, may, where the Board considers that it is fair to the company, approve
      1. the payment of remuneration or the provision of other benefits by the company to a director
      2. the payment by the company to a director or former director of compensation for loss of office
    5. Where the Board takes over any payment -it shall forthwith enter, or cause to be entered, in the interests register, if the company has one, and in the minutes of directors' meetings particulars of any such payment
      1. any shareholders who consider that the payment was not to the company
        hold between them not less than 10 per cent of the company’s voting share capital
        may, within one month of the date on which the existence of the payment or other benefit was, first made known to shareholders, whether through the annual report, production of the interests register to a shareholders’ meeting or otherwise, require the directors to call a meetings of shareholders to approve the payment by way of ordinary resolution and to the extent to which the payment is not approved by ordinary resolution, it shall constitute a debt payable by the director to the company.
    6. a company shall not make a loan to a director of the company or any relative or related entity of the director
      1. "a related entity of a director" means a company or corporation in which the director and any relative or relatives of the director between them hold, by themselves or through nominees, voting interests that equal or exceed 50 per cent or the Board or managing body of which is otherwise controlled by such persons within the meaning of section 5.
    7. a company shall enter, into any guarantee or provide any security in connection with a loan made by any person to any person referred
      1. the loan shall be voidable at the option of the company and the loan shall be immediately repayable upon being avoided by the company, notwithstanding the terms of any agreement relating to the loan.
        a transaction other than a loan to a director is entered into by it company in breach of s. 159(5)
        the director shall be liable to indemnify the company for any loss or damage resulting front the transaction
        the transaction shall be voidable it the option of the company unless
        the company has been indemnified for any loss or damage suffered by it
        any rights acquired by a person other than the directors in good faith and for value, without actual notice of the circumstances giving rise to a breach would be affected by its avoidance.
    8. A company can:
      1. making a loan to it related company, with the approval of the Board
      2. entering into a guarantee or providing security in connection with a loan made by any person to a related company
      3. providing a director with funds to meet expenditure incurred or to be incurred by him for the purpose of the company or for the purpose of enabling him to perform his duties as an officer of the company
      4. making a loan in the ordinary course of the business of lending money, where that business is carried on by the company
      5. making a loan to a director who is engaged in the salaried employment of the company or its holding company, in accordance with a scheme for the making of loans to employees of the company which is approved by the meeting of shareholders of the company in so far as its application to directors is concerned
      6. making a loan pursuant to section 81 in respect of a director who holds salaried employment under the company or in a holding company or subsidiary of the company
    9. the shareholders of a company may, by unanimous resolution or by unanimous shareholder agreement, approve any payment, provision, benefit, assistance or other distribution referred to in this section provided that there are reasonable grounds to believe that, after the distribution, the company is likely to satisfy its solvency test.
3. where directors are interested in a transaction to which the company is a party, disclose such interest pursuant to ss.147 and 148
  1. s. 147 - Meaning of "interested"
    1. a director of a company shall be interested in a transaction to which the company is a party where the director
      1. is a party to, or shall or may derive a material financial benefit from the transaction
      2. has a material financial interest in or with another party to the transaction
      3. is a director, officer, or trustee of another party to, or person who shall or may derive a material financial benefit from, the transaction
      4. is the parent, child or spouse of another party to, or person who shall or may derive a material financial benefit from the transaction
      5. is otherwise directly or indirectly materially interested in the transaction
      6. A director of a company shall not be deemed to be interested in a transaction to which the company is a party if the transaction comprises only the giving by the company of security to a third party and at the request of that third party which has no connection with the director and in respect of a debt or obligation of the company for which the director or another person has personally assumed responsibility in whole or in part under a guarantee, indemnity, or by the deposit of a security.
  2. s. 148 - Disclosure of interest
    1. A director of a company shall, forthwith after becoming aware of the fact that he is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register where it has one, and, where the company has more than one director, disclose to the Board of the company
      1. where the monetary value of the director's interest is able to be quantified, the nature and monetary value of that interest
      2. where the monetary value of the director's interest cannot be quantified, the nature and extent of that interest
    2. A director of a company shall not be required to disclose
      1. the transaction or proposed transaction is between the director and the company
      2. the transaction or proposed transaction is or is to be entered into in the ordinary course of the company's business and on usual terms and conditions.
    3. a general notice entered in the interests register or disclosed to the Board to the effect that a director is a shareholder, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction.
      1. A failure by a director to comply with s148(1) shall not affect the validity of a transaction entered into by the company or the director.
4. s. 143(1)(g) - not make use of or disclose any confidential information received by them on behalf of the company as directors otherwise than as permitted and in accordance with s. 153
  1. A director of a company who has information in his capacity as a director or employee of the company, being information that would not otherwise be available to him, shall not disclose that information to any person, or make use of or act on the information, except
    1. for the purposes of the company
    2. as required by law
    3. A director of a company may, if authorized by the Board make use of, or act on information or disclose information to
      1. a person whose interests the director represents
      2. a person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director's powers and duties,
      3. subject to the director entering the particulars of the authorization and the name of the person to whom it is disclosed in the interests register where it has one
    4. in any other circumstances authorized by the constitution, or approved by the company under s. 146
  2. The Board may authorize a director to disclose, make use of, or act on information where it is satisfied that to do so is not likely to prejudice the company.
    1. Any monetary gain made by a director from the use of information which a director has in his capacity as a director shall be accounted for to the company.
5. s. 143(1)(h) - not compete with the company or become a director or officer of a competing company, unless it is approved by the company under s.146
  1. s.146 - Approval of company
    1. after full disclosure of all material facts, including the nature and extent of any interest of the director, the transaction has been specifically authorised by either
      1. a form of resolution which has been circulated to all the members and is signed by three-fourths of all members entitled to attend and vote at a meeting of shareholders
      2. an ordinary resolution of the company passed at a meeting of shareholders at which neither the director concerned nor the holder of any share in which he is beneficially interested, either directly or indirectly, has voted as member on such resolution, or where such person has voted, such vote or votes are not counted.
    2. may be given either before or after the occurrence of the transaction to which it relates.
    3. A resolution approving a transaction or transactions or series of related transactions which has already taken place shall not be effective unless it was signed or passed not later than 15 months after the date when the transaction or the first of the series of transactions took place.
6. s. 143(1)(j) - not use any assets of the company for any illegal purpose and not do, or knowingly allow to be done, anything by which the company's assets may be damaged or lost, otherwise than in the ordinary course of carrying or its business;
7. s. 143(1)(k) - transfer forthwith to the company all cash or assets acquired on its behalf, whether before or after its incorporation, or as the result of employing its cash or assets, and until such transfer is effected to hold such cash or assets on behalf of the company and to use it only for the purposes of the company
Duty to act with care, skill and diligence
1. s. 143(1) (d) exercise the degree of care, diligence and skill required by s. 160
2. s. 143 (1) (a) exercise their powers in accordance with this Act and with the limits and subject to the conditions and restrictions established by the company’s constitution
3. - to keep proper accounting records and make them available for inspection by duly authorised persons
4. - to attend Board meeting with reasonable regularity
5. s. 143(1)(e) - not agree to the company incurring any obligation unless the director believes at that time, on reasonable grounds that the company shall be able to perform the obligation when it is required to do so
6. s. 160(2) - Where a director of a public company also holds office as an executive, the director shall exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that position would exercise.
7. s. 160(1)(b) - the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
8. s.160(4) the judgment of the director
  1. makes the judgment in good faith for a proper purpose
  2. does not have a material personal interest in the subject matter of the judgment
  3. informs the company of the subject matter of the judgment to the extent he reasonably believes to be appropriate
  4. reasonably believes that the judgment is in the best interests of the company
9. s.160(5) - The director's or officer's belief that the judgement is in the best interests of the company shall be taken to be a reasonable one unless the belief is one that no reasonable person in his position would hold.
10. s. 143(5) - A director of a company that is a subsidiary, other than a wholly-owned subsidiary, may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company and with the prior agreement of the shareholders (other than its holding company), act in a manner which he believes is in the best interests of that company's holding company even though it may not be in the best interests of the company.
11. the duties set out in sections 94, 148 and 156 are duties owed to shareholders
  1. s.148 -Disclosure of interest
  2. s.156 - Disclosure of share dealing by directors
    1. has a relevant interest in any shares issued by the company
      1. disclose to the Board the number and class of shares in which the relevant interest is held and the nature of the relevant interest
      2. ensure that the particulars disclosed to the Board under paragraph (2)(a) are entered in the interests register.
Transactions involving self-interest
1. s. 147 - Meaning of "interested"
  1. interested in a transaction to which the company is a party
    1. shall or may derive a material financial benefit from the transaction
    2. material financial interest
    3. if the transaction comprises only the giving by the company of security to a third party
      1. A director of a company shall not be deemed to be interested in a transaction
2. s. 148 - Disclosure of interest
  1. after becoming aware of the fact that he is interested in a transaction or proposed transaction with the company
    1. the nature and monetary value of that interest
    2. the nature and extent of that interest
    3. transaction is between the director and the company
    4. the ordinary course of the company's business and on usual terms and conditions
    5. the validity of a transaction entered into by the company or the director not affected by a failure to comply
3. s. 149 - Avoidance of transactions
  1. may be avoided by the company at any time before the expiration of 6 months after the transaction is disclosed to all the shareholders whether by means of the company's annual report or otherwise.
    1. A transaction shall not be avoided where the company receives fair value under it.
      1. determined on the basis of the information known to the company and to the interested director at the time the transaction is entered into.
        Where a transaction is entered into by the company in the ordinary course of its business and on usual terms and conditions
      2. shall only be avoided on the ground of the director's interest in accordance with s. 149 or the company's constitution
4. s. 150 - Effect on third parties
  1. shall not affect the title or interest of a person in or to property which that person has acquired where the property was acquired
    1. from a person other than the company
    2. for valuable consideration
    3. without knowledge of the circumstances of the transaction
5. s. 151 - Application of sections 149 and 150 in certain cases shall not apply
  1. remuneration or any other benefit given to a director in accordance with s.159
  2. an indemnity given or insurance provided in accordance with s. 161
6. s. 152 - Interested director may vote
  1. Subject to the s. 152(2) and to the constitution of the company
    1. in the case of a public company, not vote on any matter relating to the transaction, and if he does vote, his vote shall not be counted
    2. in the case of a private company, vote on any matter relating to the transaction provided he discloses his interest under s. 148
    3. attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purpose of a quorum
    4. sign a document relating to the transaction on behalf of the company
    5. do any other thing in his capacity as a director in relation to the transaction, as if the director were not interested in the transaction
    6. shall not apply to a transaction to which s. 146 applies
      1. The approval of the company for the purposes of s. 143(l)(h) and of s. 153(l)(d)
7. s. 153 - Use of company information
8. s. 154 - Meaning of "relevant interest"
  1. a director of a company has a relevant interest in a share issued by a company
    1. is a beneficial owner of the share
    2. has the power to exercise any right to vote attached to the share
    3. has the power to control the exercise of any right to vote attached to the share
    4. has the power to acquire or dispose of the share
    5. has the power to control the acquisitions or disposition of the share by another person
    6. under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share
      1. may at any time have the power to exercise any right to vote attached to the share
      2. may at any time have the power to control the exercise of any right to vote attached to the share
      3. may at any time have the power to acquire or dispose of the share
      4. may at any time have the power to control the acquisition or disposition of that share by another person
    7. director has a relevant interest in the share
      1. the exercise of the right to vote attached to the share
      2. the control of the exercise of any right to vote attached to the share
      3. the acquisition or disposition of the share
      4. the exercise of the power to control the acquisition or disposition of the share by another person
      5. a director of the company has the power to exercise the right to vote attached to 20 percent or more of the shares of that person
      6. a director of the company has the power to control the exercise of the right to vote attached to 20 percent or more of the, shares of that person
      7. a director of the company has the power to acquire or dispose of 20 percent or more of the shares of that person
      8. a director of the company has the power to control the acquisition or disposition of 20 percent or more of the shares of that person
    8. has a relevant interest in a share regardless of whether the power
      1. is expressed or implied
      2. is direct or indirect
      3. is legally enforceable or not
      4. is related to a particular share or not
      5. is subject to restraint or restriction or is capable of being made subject to restraint or restriction
      6. is exercisable presently or in the future
      7. is exercisable on the fulfillment of a condition
      8. is exercisable alone or jointly with another person or persons
9. s. 155 - Relevant interests to be disregarded in certain cases
  1. no account shall be taken of a relevant interest of a person in a share if
    1. the lending of money or the provision of financial services, or both, and that person has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of that person
    2. that person has the relevant interest by reason only of acting for another person to acquire or dispose of that share on behalf of the other person in the ordinary course of business of a licensed investment dealer
    3. being appointed as a proxy to vote at a particular meeting of members, or of a class of members, of the company and the instrument of that person's appointment is produced before the start of the meeting
    4. trustee corporation or a nominee company
      Annotations:
      - Company formed by a bank or other fiduciary organization to hold and administer securities or other assets as a custodian (registered owner) on behalf of an actual owner (beneficial owner) under a custodial agreement.
      1. in the ordinary course of business of that trustee corporation or nominee company
    5. the person is a bare trustee of a trust to which the share is subject
      Annotations:
      - A person who holds property in trust for the absolute benefit and at the absolute disposal of the beneficiaries who are of full age and are sui juris, and the person so holding in trust has no interest in or duty to perform in or inrelation to the property except to convey the same when required according to the directions of the beneficiaries.
10. s. 156 - Disclosure of share dealing by directors
  1. relevant interest in any shares issued by the company
    1. disclose to the Board the number and class of shares
    2. the nature of the relevant interest
    3. entered in the interests register
    4. acquires or disposes of a relevant interest in shares
      1. the number and class of shares
      2. the nature of the relevant interest
      3. the consideration
      4. the date
11. s. 157 - Restrictions on share dealing by directors
  1. the fair value of the shares or securities
    1. the fair value of shares or securities is to be determined on the basis of all information known to the director or publicity available at the time.

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DIRECTORS' DUTIES

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