THINGS YOU MUST KNOW AS A DIRECTOR OF A COMPANY

A director of a company simply means what it is, a person who directs and manages the affairs of a company. The fact that a company is an artificial person (if you missed, read here http://www.tylegal.com/2015/11/the-difference-between-natural-person.html means that the company can only act through a natural person.

This is what the director of a company does; he takes care of the day-to-day responsibilities of the company.

Every company in Nigeria must have at least 2 directors who are appointed by the subscribers to the memorandum and articles of association of the company. The directors are also expected to subscribe to the shares of the company. If a director fails to pay up on the number of shares he subscribed to within the specified period, he may cease to be a director and he will not be qualified to be re-appointed as a director of that company until he pays up.

A director of a company owes a fiduciary duty to the company and is expected to act in the best interest of the company. He should not enter into transactions in which he has or may have a personal interest that will conflict with the interest of the company. He must also not put himself in a position where his interest and duty will conflict with that of the company.

Other duties of a director are:

·         Duty to avoid conflict of interest.

·         Duty to act with reasonable care and skill.

·         Duty to act within the powers stated in the article of association.

·         Duty not to use confidential information which he obtained as a director for his own use.

·         Duty to attend the Board of Directors and shareholders’ meetings of the company.

If a director of a company has any interest in any contract or proposed contract with the company, he should disclose his interest in that contract. He must not make any hidden profit from any contract with the company and if he does, he must disclose it to the company.

However, there are some people that cannot be directors of a company and such people include:

·         Infants

·         Bankrupt people

·         Fraudulent people

·         People of unsound mind

·         Directors that have been absent from the Board of Directors’ meetings for a consecutive period of 6 months

·         People who are 70 years and above; but if it is a public company and the person wishes to be a director, he must disclose his age to the company.

A person can be a director in more than one company as long as he does not let his affairs affect his dedication to each company. He must also make sure that there is no conflict of interest in his dealings with the companies. The role of a director is very important so directors should take steps towards getting more knowledge on their roles as directors to the company.

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