HOW DOES THE NEW COMPANIES ACT EFFECT COMPANY DIRECTORS?
Many of our clients own their own businesses and are affected by the changes that were introduced with the new Companies Act, 71 of 2008. In particular, those relating to the appointment, termination and removal of directors. In a recent notification from our attorneys, Smith Tabata Buchanan Boyes, they gave a great summary of these changes and we thought they’d be of use!
By way of summary:
- Directors are appointed by the majority shareholders entitled to vote thereon, for an indefinite term or as the Memorandum of Incorporation (MOI) stipulates.
- Directors’ positions are terminated when, amongst other things, the term of office expires as per the MOI, he/she resigns, on his/her death or by resolution of the shareholders or the Board.
- Removal of a director can be effected by ordinary resolution of the shareholders entitled to vote, or by a board meeting (when it is alleged that director is disqualified, incapacitated or negligent in duties), despite anything to the contrary in the MOI. A director must be given the opportunity to be heard at a meeting before the vote on removal.
Avoid liability for errors and make sure that you, as director, act in compliance with the Act by obtaining professional assistance. If you’d like any further advice, please feel free to contact our director, Allison, at allison@rivigangroup.com.
