BUSINESS AND CORPORATE LAW
WEEK 9
COMPANY MANAGEMENT: DIRECTORS
THE COMPANY SECRETARY; THE AUDITOR
Week 9: Company management
At the end of the lesson, the student should be
able to:
1. Describe the appointment and duties of
directors
2. Explain the appointment and duties of the
company secretary
3. Describe the appointment; duties, rights and
removal of the auditor
Directors
Directors:
Qualifications
Not:
-under 18 years of age
-insolvent or un-rehabilitated insolvent unless with court leave
-prohibited from being a director or taking part in co
management
-convicted of theft; fraud; forgery with prison term or fine of
more than P5000.
-Removed from an office of trust due to misconduct
-of unsound mind
-prohibited by the co constitution
s.154: transaction by a director is valid even if not qualified for
appointment as director.
Directors
Directors:
Appointment
-first directors: In application for
registration: give consent on the
prescribed form
-Other directors appointed at the annual
meeting
-Managing Director/CEO: appointed by the
board of directors
Directors
Directors:
-Alternate directors: appointed by a director to
attend meetings in his absent: constitution to
authorise, directors may also have to authorise,
must be qualified for appointment
-Directors/board may be given power by the
constitution to appoint: they co-opt, e.g. if they
want to appoint someone not on the board as
the CEO/MD
Company: Directors
Duties of directors:
S 130 (statutory duties):
•To exercise powers within the Cos Act
•To obtain authorisation of the general meetingif Act or the constitution require
•Care skill and diligence (even in delegation of
duty)
•Not to make co incur debts when there are no
reasonable grounds that co will NOT render
performance
Company: Directors
Duties of directors cont.:
• To account to the company
• No disclosure or use of confidential info
• Not to compete with the co: full disclosure before
activity is necessary
• To disclose interest
• Not to use assets for illegal purpose
• To transfer assets and cash of the co
• To attend meetings
• To keep accounting records
Directors
Directors
Common law duties (Imposed by case law but
now codified in the Act as seen above)
-No conflict of interest: Robinson v
Randfontein case; IDC v Cooley;
-Not to exceed or limit their powers
-To exercise unfettered discretion: Coronation
Syndicate v Lillienfield
-Exercise power for the intended purpose
Directors
Directors: ceasing to hold office
• Public co: ordinary resolution by a meeting called for
that purpose or for other purposes as well
• Private co: special resolution by a meeting called for
that purpose
• Pirector resigns: If co has one director, must call
meeting to receive notice of resignation
• Becomes disqualified
• Dies
• Vacates office in accordance with co constitution eg
retirement
Company secretary
Co Secretary/CS
Qualifications:
-a natural, artificial person or firm/partnership
-If artificial person (co): at least one director is
qualified
-P/ship; at least one member is qualified
C S should not be:
-an undischarged bankrupt;
- A person who is the sole director of a company
- -The auditor of the company
Company secretary
C S qualifications contd.
• For a public and non-exempt private company:
• A member of BICA or
• A qualified auditor or
• A member of Southern Africa Institute of
Chartered Secretaries and Administrators
(SAICSA)
• A legal practitioner or
• A member of a professional association of co
secretaries approved by the Minister
Company secretary
Duties of CS
-responsible to directors in the preparation and filing
of all returns to the Registrar: change of name;
alteration of he constitution; registration of particulars
of charges; certificates on shares issued for non-cash
consideration; annual return etc.
-Issue of all notices of meetings and to respond to
enquiries
-attending meetings of directors
Company secretary
Duties of CS
-responsible to the board in maintaining of the share
register; debenture holders; secretaries and charges
-keeping of accounting records
-adequate system of record keeping
Other duties: from the contract; Stock Exchange if co is
listed
CS has the necessary apparent ostensible authority:
Panorama case
Company auditor
The auditor (external):
(Note that the auditor does not participate in the
management of a company)
• Appointment:
• first auditor: by the directors before the annual
meeting
• If not, is appointed at the first annual meeting
• Thereafter every public and non-exempt private co
shall at each meeting appoint/reappoint an auditor
to hold office from the conclusion of the meeting to
the conclusion of the next annual meeting.
Company auditor
Auditor qualifications s194:
-Must be qualified under rules established by
BICA and duly registered as auditor
-Must also be licensed by the Botswana
Accountants Oversight Authority (BAOA), a
body established under the Financial
Reporting Act of 2014.
-Must be ordinarily resident in Botswana
A body corporate (limited liability company)
does not qualify for appointment as auditor
Company auditor
Someone is disqualified for appointment as auditor if
he/she is:
-a director of the company
-a partner/employee of a director
-employee of the company
-a director/employee of a body corporate which is an
officer of the company
-a debtor of the co for over P 5000 unless debt is in
the ordinary course of business
The Auditor cont.
Replacing:
• If auditor is qualified for re-appointment, no replacement unless:
• at least 20 working days written notice of the proposal to replace him
is given to the auditor
• auditor given reasonable opportunity to make representations (be
heard in writing/orally) at the shareholders meeting
• auditor be paid reasonable fees for making such representations
• Court order may be issued to stop the representations if a person who
feels that the representations are defamatory without any basis.
The Auditor cont.
Resignation before annual meeting (s 198(1):
-Give notice to the board to call special meeting of s/holders
-auditor is given an opportunity to make representations/be
heard/explain resignation at the special meeting
-his notice terminates his appointment and the business of the special
meeting shall include appointing a replacement
-auditor be paid reasonable fees to attend special meeting
-must receive notice and agenda for the meeting called to receive his
notice of resignation
END