Home >> Dictionary Of Banking >> Companies to Guarantee Guaranty >> Directors


company, director, section, managing, time, board and trustees

DIRECTORS. The directors of a com pany are the members who are chosen by the other shareholders to direct or conduct the business of the company. The directors, in some cases, meet every day and are practi cally acting managers of the company ; but in other cases they meet only at intervals, often just once a week, when all the impor tant business of the week is brought before them. There is usually a chairman and a vice-chairman, and the whole body is called the board of directors. The room in which they meet is the board room, in allusion to the board or table at which they sit.

The powers of directors are limited to the provisions of the memorandum and articles of association of the company.

Directors have been called trustees for the company, but in Smith v. Anderson (1680, 15 Ch. D. 247), Lord Justice James said : " A trustee is a man who is the owner of the property, and deals with it as a principal. as owner, and as master, subject only to an equitable obligation to account to some per sons to whom he stands in time relation of trustee, and who are his cestuis qz-te trustent. The same individual may fill the office of director and also be a trustee having pro perty, but that is a rare, exceptional, and casual circumstance. The office of director is that of a paid servant of the company. A director never enters into a, contract for himself, but he enters into contracts for his principal, that is, for the company of whom he is a director, and for whom he is acting. He cannot sue on such contracts, nor be sued on them, unless he exceeds his authority." Jessel, M.R., said (in In re Forest of Dean Coal Company, 1879, 10 Ch. D. 450) : " Directors have sometimes been called trustees or commercial trustees, and some times they have been called managing partners ; it does not matter much what you call them, so long as you understand vliat their true position is, which is that they are really commercial men managing a trading concern for the benefit of them selves and of all the other shareholders in it. They are bound, no doubt, to use reasonable diligence having regard to their position, though probably an ordinary director, who only attends at the board occasionally, can not be expected to devote as much time and attention to the business as the sole managing partner of an ordinary partnership, but they I are bound to use fair and reasonable diligence in the management of their company's affairs, and to act honestly. But where with

out fraud and without dishonesty they have omitted to get in a debt due to the company by not suing within time, or because the man was solvent at one moment and became insolvent at another, I am of opinion that it by no means follows as a matter of course, as it might in the case of ordinary trustees of trust funds or of a trust debt, that they are to be made liable." The number of shares which a dirrect must hold in the company to qualify him for the post of director, depends upon the terms of the articles of association. The Companies (Consolidation) Act, 190S, does not provide for any special qualification, but Table A (see Section 11 under ARTICLES OF AssociArioN), Rule 70, says the qualification of a director shall be the holding of at least one share in the company.

It shall be the duty of every director I is by the regulations of the company re quired to hold a specified share qualification, and who is not already qualified, to obtain his qualification within two months after his appointment or such shorter time as may be fixed by the regulations of the company (Section 73).

Every company must keep a register of the names and addresses and occupations of its directors and managers, and furnish a copy thereof to the registrar of companies and notify any changes (Section 75).

In a limited company the liability of the directors may, if so provided by the memor andum, be unlimited (Section 60).

A limited company, if so authorised by its articles. may, by special resolution, alter its memorandum so as to render unlimited the liability of its directors or managers (Section 61).

The following arc a few of the rules where Table A applies :—The directors may appoint one of their number to be managing director at such remuneration as they think