{"id":5036,"date":"2020-08-10T10:05:55","date_gmt":"2020-08-10T07:05:55","guid":{"rendered":"https:\/\/tmc.ke\/staging\/?p=5036"},"modified":"2020-08-10T10:05:56","modified_gmt":"2020-08-10T07:05:56","slug":"roles-and-duties-of-company-directors","status":"publish","type":"post","link":"https:\/\/tmc.ke\/staging\/roles-and-duties-of-company-directors\/","title":{"rendered":"ROLES AND DUTIES OF COMPANY DIRECTORS"},"content":{"rendered":"\n

A company acts through two bodies of people; its shareholders and its board of directors. The board of directors are in charge of the management of the company\u2019s business; they make the strategic and operational decisions of the company and are responsible for ensuring that the company meets its statutory obligations. The directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day affairs. In Kenya, company directorship is governed by the Companies Act of 2015.<\/a> In this article we\u2019ll take an in depth look at who exactly a company directors are and the role they play in the company\u2019s management. <\/p>\n\n\n\n

NATURE OF DIRECTORSHIP<\/strong><\/p>\n\n\n\n

All\nregistered companies must have directors, and normally there must be at least\ntwo, although one suffices for a private company. The position of directors is\nsimilar to that of trustees. This means that they do not have legal title in\ntrust property instead they are bound to invest for the benefit of the company e.g.\nin their fiduciary relationship to the company, in issuing shares, and\napproving transfer of shares. They are, however, trustees for the company, and\nnot for the individual shareholders, nor for third parties who have made\ncontracts with the company. <\/p>\n\n\n\n

A\ndirector\u2019s fiduciary duty refers to their trust and confidence in the company. A\nfiduciary is someone who acts for or on behalf of another in a relationship of\ntrust and confidence, which equity protects by imposing on the fiduciary a duty\nof loyalty. This duty requires that a director should not utilize the fiduciary\nposition in a way which adversely affects the interest of the person for whom\nthe fiduciary is acting.<\/p>\n\n\n\n

Directors\nare also sole agents for the company when they make contracts for the company\nand, as such, are in a fiduciary position to the company and cannot make secret\nprofits at the company\u2019s expense. <\/p>\n\n\n\n

WHAT CAN COMPANY\nDIRECTORS DO?<\/strong><\/p>\n\n\n\n

The\npowers of directors are usually set out in the company\u2019s Articles of\nAssociation (Company Constitution). Directors have a duty to carry on the\nbusiness of the company. They also have powers of management of the company.<\/p>\n\n\n\n

The\npowers of directors may be increased or in certain circumstances restricted by\nthe shareholders. If the directors act beyond their powers the shareholders may\nvote to have them removed from the position. A director is in a fiduciary\nposition to the company in his capacity as an agent, and he cannot, therefore,\nplace himself in a position where his own interests conflict with his duties. Directors\nmust on no account make any secret profits. Any such benefit is regarded as a\nbribe, and the directors are accountable to the company for such.<\/p>\n\n\n\n

LIABILITIES OF COMPANY\nDIRECTORS<\/strong><\/p>\n\n\n\n

The\ndirectors are liable for negligence or breach of trust in relation to the\ncompany\u2019s affairs. They will also be held liable in cases of fraud or gross\nnegligence in respect to the company or third persons.<\/p>\n\n\n\n

During\nthe course of a winding-up (process by which a company’s assets are collected\nand sold in order to pay its debts), the Companies Act provides that a director\nwho has misapplied or retained or become liable or accountable for any money or\nproperty of the company, or has been guilty of any misfeasance or breach of\ntrust in relation to the company, may be compelled to repay or restore the\nmoney or property or to pay such sum to the company as the court thinks fit.<\/p>\n\n\n\n

Directors\nare personally responsible for fraud; although, where the company has taken\nadvantage of and benefited from a director\u2019s fraudulent misrepresentations, the\ncompany may be held bound as well as the directors. <\/p>\n\n\n\n

Managing a company is no easy feat and so it helps to know what exactly a managerial\/ directorship position entails. Hopefully this article provides some useful insight on what the role of a company\u2019s director entails. <\/p>\n\n\n\n

Also see: <\/a><\/p>\n\n\n\n

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