Corporate Board


 <P>  APPOINTMENT OF  COMPANY DIRECTORS  Iyke Ozemena  Attorney, Corporate Consultant and Author:  By s.18 any two or more persons may form and incorporate a private company.  The articles of such a company would have the names of the two persons as its directors.  This is so as a result of pre-incorporation agreement.  1  After incorporation the company can appoint its first directors if necessary through resolutions or by naming them in the memorandum and articles.  2  The requirement that there should be at least two directors is a mandatory one.  At no time shall the number fall below two; but if it does, the company has one month to appoint a new director.  3  A director or member of a company having knowledge that the number of directors has fallen below the minimum of two for more than 60 days while still carrying out its normal business by the company during that period.  4  Shareholders have the power to appoint Directors at the general meeting by ordinary resolution -- s.303 Companies Act 1985: UK.  For the purposes of clarity, a director is a person duly appointed by the company in accordance with the provisions of the Companies Act.  5  It is not an imposter or impersonator, but acclaimed proxies or aides of the directors are exempted.  See internal management rule:  Turquand.  Appointment of subsequent  directors shall be the business of general meetings.  Proposed names are tabled, scrutinized and voted for.  6  Appointment of directors may become necessary where the present directors resign, die or removed.  Whichever is the case, the remaining shareholders or their accredited representatives shall have the power to apply to the court for an order to convene a  meeting  in which all those entitled to attend a general meeting could appoint new directors.  If for any reason the representatives are unable to convene the meeting the creditors are allowed under this section (s.248(2)) to do so for the sole purpose of appointing new directors.  Casual vacancies for directors do exist when a director(s) dies, resigns, disqualified, or removed.  Because of the smooth running of the company appointment of new directors to replace them become necessary.  In this circumstance, the Board of Directors are empowered to fill the vacancies which would later be approved or otherwise in the next general meeting.  In the case of removed director, his successor's tenure shall be the remainder of the predecessor's tenure.  It is to be noted that the shareholders have the same powers as the directors with regards to filling casual vacancies.  This is a very important power in the hands of directors for they can use the opportunity of casual vacancy to shift the balance of power in the company to their interests.  7  Section 255 allows a person to be appointed a director for life provided that he is removable under s.262 which prescribes the procedure for the removal of directors.  Once a person is appointed a director in consonant with the Act, his acts shall be valid notwithstanding any defect or disqualifying circumstances surrounding his appoint.  This provision applies to the Secretary or a manager bona fide acting for the company, purports to appoint two or more persons as directors in one piece of resolution.   8    To stripe it off this element of invalidity, the members must all agree to such proposal without any vote against it.  Then on presentation before the meeting it shall be taken to have complied with the provision of this section.   9  A resolution moved not in compliance with this section shall be void.  10  However, it does not apply to a resolution altering the company's articles.    11  The Law Reform Commission recommended that a company should have the powers of natural persons to realize its objectives.  The Directors are its human agents through which it acts.  As for who is a Director, the Commission recommended a proper definition to include a "person duly approved" by a company to superintend the affairs of the company, and those "held out" by the company to be Directors.  It went further to recommend that all Directors of registered companies called various names , like Marketing, Personnel or Corporate Directors should be duly appointed by the company in a general meeting. A third party dealing with these directors would not be prejudiced by their disqualification, if any.  But those fake directors would be liable personally to the tune of N1000 fine for each day of the default and his acts would not bind on the other hand if the company was in default, it shall pay a fine of N1000 for each day of the default.  It recommended that retention of shadow Directors subject to legal relationship that binds them and suggested that Article 75 Table A and s.175 of the former Companies Act be incorporated where appointment and removal of directors are found in a section.  On the filling of casual vacancies it recommended that a meeting of shareholders should be convened within 28 days of the appointment for ratification.  But Directors found guilty should be disqualified for 10 years instead of 5 years.  And court should have the power to make qualificatory order.  As to the office of the Director, when a Director retires or vacates, it proposes incorporation of Article 87 of Table A verbatim.   Corporations, it proposes should continue to be appointed as Directors in public companies provided a permanent representative is a the Board who would be approved by the general meeting.  Such representative is removable by the general meeting and could be replaced by the company.  It recommended against appointment of Corporate Directors in private companies.  Bibliography  CAMA   =    Companies and Allied Matters Act 1990  LRC        =    Law Reform Commission  1.    Section  246  (1)   CAMA   2.    Section  247   3.    Section  246  (2)  4.    Section 246  (30  5.    Section  244  (1)  6.    Section   248  (1)  7.    Section   248  (1)  8.    See FRIENDLY'S  comment in ESSEX  UNIVERSAL CORPORATION V.   YATES 305 F2 d 572 1962 p.581  9.    Section  260     10.    Section  261  (1)  11.    Section  261  (2)  12.    Section  261  (4)      <P>    Author:  DIRECTORS: Duties & Enforcement   |    <P>     GUIDE TO FINAN$IAL $ECURITY   |

Views: 751


You need to be a member of Corporate Board to add comments!

Join Corporate Board

© 2017   Created by Iyke Ozemena.   Powered by

Report an Issue  |  Terms of Service