DIRECTOR, one of a number of persons appointed to conduct the affairs of joint stock undertakings, such as banks, railways, water and gas companies, fire and life assurance companies, and various kinds of manufacturing and trading concerns. The office of a D. is in all cases one of less or more responsibility, sometimes of consid erable risk, and according to commercial maxim, ought not to be accepted lightly or for the mere honor which is supposed to be incidental to the position. On this point, unfortunately, there is not a little loose morality and want of due consideration. Men are seen to enter on the office with scarcely a thought of attending to their duty, or of the injury they may inflict by allowing their names to be attached to undertakings in the management of which they cannot be said to take any particular interest. Latterly, so ninny instances have occurred of the perfunctory performance of the duties of direc tors, greatly to the damage of those who confided in them, that, perhaps, new and more wholesome views may arise on the subject. As a member of a body incorporated by the legislature, a railway D. is bound to administer the affairs of the company only with the means legitimately put at his disposal, nor can he be expected to incur any personal liability to sustain the general operations. Usually, however, when there is any tem porary or peculiar shortcoming in the finances, the directors overdraw to a certain extent the company's bank account on their personal responsibility; in all such cases, and where the outlay has been justifiable, the shareholders rarely decline to authorize meas ures which will relieve the directors of their obligations. In the case of banks, there are usually two kinds of directors—the ordinary and the extraordinary. The ordinary directors are practically the conductors of the undertaking, while the extraordinary attend only on particular occasions, and are, in fact, little else than ornamental appen dages, who4e names impart a degree of distinction to the concern. As regards bank as well as railway directors, it is the rule that they must respectively possess a certain amount of stock. It is an understanding that the directors of railways, banks, and assurance companies, should be paid in sonic way for their services. Being mostly men in business, they cannot be expected to give away their time and take trouble for nothing. Their payment, however, in the shape of an honorarium., is generally trifling in compar ison to the amount of labor which is to be encountered. At meetings of shareholders, small sums are voted to be set aside for the directors, which sums are for the most part appropriated in the ratio of attendance. The fee of a bank D. is not usually half a guinea at each meeting; though it is as customary for those present to divide amongst them the sum set apart for the occasion, wherefore the regular atteuders get most. The insignificance of these fees, even where no stinginess prevails, is employed as an argu ment why anything like a scrupulous examination into affairs is not reasonably to be expected—an argument seemingly of no great moral or legal force; for it is clear there can be no valid excuse for neglecting a trust which has been voluntarily accepted.
The difficult questions as to the cases in which directors incur liability for the losses sustained by the shareholders whose affairs they have undertaken to manage, have often been raised in courts of law; but, hitherto, no satisfactory solution of them has been found. See JOINT-STOCK COMPANY. Of the statutory provisions as to directors con tained in the joint-stock companies acts (consolidated in the act 25 and 26 Viet. c. 89), the chief are these: 1. That the first directors shall be selected, and their number deter mined, by the subscribers of the original memorandum of association, who shall them selves be deemed directors until other directors are appointed. 2. That his office of
director shall be vacated by the acceptance of any other office or place of profit under the company, by bankruptcy or insolvency, or by being concerned in any contract with the company. 3. At the first ordinary meeting after the incorporation of the company, the whole of the directors shall retire from office; and at the first ordinary meeting in every subsequent year, one third of the directors for the time being, or if their number is not a multiple of three, then the number nearest to one third, shall retire from office. In every subsequent year, one third, or other nearest number, who have been longest in office, shall retire. A retiring director shall be re-eligible. 4. The company in a general meeting may increase or diminish the number of directors. 5. Any casual vacancy occurring in the board of directors may be filled up by the directors.; but any person so chosen shall retain his office so long only as the vacating director would have retained the same if no vacancy had occurred. The company, in general meeting, may remove any director, and appoint another in his stead. 6. The directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings as they think fit, and determine the quorum necessary for the transaction of business. 7. questions arising are determined by a majority of votes, the chairman having a cast ing vote in case of equality. 8. A. director may at any time summon a meeting of directors. 9. The directors elect their own chairman, and determine the period of his office. In case no chairman has been appointed, or be is absent, the directors shall appoint one of their number to preside for that time only. 10. Directors may delegate their powers to committees of such number as they may judge expedient. 11. The directors must cause minutes to be made in books provided for the purpose. These minutes shall set forth all appointments of officers made by the directors, the names of the directors present at each meeting of directors or of committee, all orders made by meetings or committees, and all resolutions and other proceedings of these bodies. These minutes shall be signed by the chairman, and shall be receivable in evidence of what took place without any further proof. 12. The directors, with the sanction of the company in a general meeting, may declare that a dividend shall 'be paid to the share holders in proportion to their shares. No dividend shall be payable except out of the profits arising from the business of the company. 13. If the directors shall declare any dividend when the company is known by them to be insolvent, or any dividend the payment of which would, to their knowledge, render it insolvent, they shall be jointly and severally liable for the debts of the company then existing, and for all that shall be thereafter contracted, so long as they shall respectively remain in office. It is pro vided that the amount for which they shall be so liable shall not exceed the amount of the dividend declared, and that if any of the directors were absent at the time of snaking the dividend, or protested in writing, they shall be exempted from liability. Before recommending a dividend, the directors may set aside a reserved fund out of the profits of the company. In companies incorporated for carrying on undertakings of a public nature, such as railways, the appointment, rotation, and powers of directors, are regu lated by the statute commonly called "The Companies Clauses Act," 8 Via. c. 16 (for Scotland, c. 17). Two directors are sufficient to sign a contract. The directors have the management and superintendence of the affairs of the company, and may lawfully exercise all the powers of the company, except such matters as are specially directed to be transacted by a general meeting of the company. See LIABILITY (LIMITED) ACTS, Joilim.sTocic COMPANIES.