According to the Companies Act every company must have at least one Director.

A limited company must have at least two officers. Therefore, a sole director cannot also be the
secretary. However, it is possible for the company secretary to also be a director of the company if
another director or secretary is also appointed.

The members (shareholders) of the company decide who are to be the directors. It is often the case
in new/small companies that the directors are the shareholders. This is not a legal requirement but
occasionally a company may have it written into the Memorandum and Articles of Association that
they should be. Appointing directors is normally done in a general meeting though a company can
make decisions by written resolution signed by all members entitled to vote.

Can anyone be a director?

Generally it is up to the members (shareholders) to appoint the people they believe will run the
company well on their behalf. Except for occasional restrictions imposed by the government on the
activities of certain foreign nationals, a director can be of any nationality and can live any where in
the world.

However there are some restrictions that prevent anyone becoming a director. These are:
 • The person must not have been disqualified by a court from acting as a
company director (unless he or she has been given leave (permission) to act by
a court for a particular company);
• The person must not be an un-discharged bankrupt (except with leave of the
court);
• In Scotland , anybody under the age of 16. In England & Wales there are no age
restrictions.
• For a PLC or their subsidiaries, anybody over the age of 70 unless specifically
approved by a general meeting of the company.

What are the directors' general responsibilities?

The directors are responsible for the management of the company. While their powers
can be restricted by the company's articles they can, in most cases do anything that the
company can do. With these powers, come responsibilities. Since the directors can act as
and for the company, they must ensure that the company does everything that it is
obliged to do by law and that the decisions they make are in the best interests of the
company.

In this context the interests of the company are those of the shareholders as a whole.
These may be different from the interests of customers, employees, individual
shareholders or the directors themselves.

Except where powers are delegated to a committee of directors or to a managing or

executive director, the directors act collectively as a board. Individual directors do not
have the authority to commit the company unless authorised by the board.

What responsibilities does a director have towards Companies House?

Every company director has a personal responsibility to ensure that statutory documents
are delivered to the Registrar as and when required by the Act. The following are of
particular importance:

• Submitting the annual accounts (only for limited companies). Failure to submit
accounts on time can lead to increasing penalties, the dissolution of the
company and prosecution. See the notes below.
• Submitting the annual return. Whilst this may be completed by the company
secretary it is the directors’ responsibility to ensure that it is submitted on time.
• Notice of change of directors or secretaries or in their particulars.
• Notice of change of registered office.

What happens if accounts or annual returns are not filed?

All the directors of the company could be prosecuted. Failure to deliver documents on
time is a criminal offence. On conviction, a director could end up with a criminal record
and a fine of up to £5,000 for each offence.

Alternatively, if the Registrar believes that the company is no longer carrying on

business or in operation, he could strike it off the register and dissolve it. If this happens
all the assets of the company, including its bank account and property, generally become
the property of the Crown.

The company can only be restored to the register and continue in existence by means of
a court order.

Are directors really prosecuted?

Yes. On average more than 1,000 directors are prosecuted each year for failing to deliver
accounts and returns to the Registrar on time. Persistent failure to deliver statutory
documents on time may also lead to a director being disqualified from taking part in the
management of a company, for a specified period.

What happens if accounts are delivered late?

As a director of a private limited company, you normally have a maximum of 10 months

from the accounting reference date in which to deliver your company's accounts to the
Registrar. The accounting reference date is the date to which your accounts must be
As a director of a public limited company, you normally have a maximum of 7 months
from the accounting reference date in which to deliver your company's accounts to the
Registrar.

If your company's first accounts cover a period of more than 12 months, they must
reach Companies House within 22 months of the date of incorporation for private
companies and 19 months for public companies.

Second
If accounts are received late, the company will automatically be charged a 'late filing
penalty'. These penalties can be in addition to any fine imposed by a court.

How can prosecution and penalties be avoided?

The Board of Directors
Make sure your company complies on time with all its filing obligations, not only in
connection with its accounts and annual returns, but in connection with all other
Responsibility, Role, and Structure
documents required under the Act.

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primary responsibility of the board of directors and very few will be able to give you a
include on your company stationary follow this link to our FAQ's page.
definitive answer.
The Register of Directors and Secretaries
Purpose, Authority and Responsibility of the Board of Directors
While companies must keep their own register of directors and secretaries, which must
be available for public inspection, Companies House also keeps a register based on
information
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of the board of directors is to protect the shareholders' assets
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countries, the sentiment is much different; many directors there feel that it is their
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How do I change the particulars of a Director?

If a companyand
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Makeup of themoves
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of Directors
should be amended in the Register of Directors/Secretaries and Companies House should
be notified on form 288c. Companies House must be notified within 14 days of the
The board is made up of individual men and women (the "directors") who are elected by
change.
the shareholders for multiple-year terms. Many companies operate on a rotating system
so that only a fraction of the directors are up for election each year; this makes it much
more difficult for a complete board change to take place due to a hostile takeover. In
most cases, directors either, 1.) have a vested interest in the company, 2.) work in the
upper management of the company, or 3.) are independent from the company but are
known for their business abilities.

The number of directors can vary substantially between companies. Walt Disney, for
example, has sixteen directors, each of whom are elected at the same time for one year
terms. Tiffany & Company, on the other hand, has only eight directors on its board. In
the United States, at least fifty percent of the directors must meet the requirements of
"independence", meaning they are not associated with or employed by the company. In
theory, independent directors will not be subject to pressure, and therefore are more
likely to act in the shareholders' interests when those interests run counter to those of
entrenched management.
In General Electric's 2002 annual report, the issue of director independence was
addressed: "At the core of corporate governance, of course, is the role of the board in
overseeing how management serves the long-term interests of share owners and other
stakeholders. An active, informed, independent and involved board is essential for
ensuring GE’s integrity, transparency and long-term strength. As a result of the 2002
changes, 11 of GE’s 17 directors are 'independent' under a strict definition, with a goal of
two-thirds."

Committees on the Board of Directors

The board of directors responsibilities include the establishment of the audit and
compensation committees. The audit committee is responsible for ensuring that the
company's financial statements and reports are accurate and use fair and reasonable
estimates. The board members select, hire, and work with an outside auditing firm. The
firm is the entity that actually does the auditing.

The compensation committee sets base compensation, stock option awards, and
incentive bonuses for the company's executives, including the CEO. In recent years,
many board of directors have come under fire for allowing executives salaries to reach
unjustifiably absurd levels.

In exchange for providing their services, corporate directors are paid a yearly salary,
additional compensation for each meeting they attend, stock options, and various other
benefits. The total amount of directorship fees various from company to company. Tiffany
& Company, for example, pays directors an annual retainer of $46,500, an additional
annual retainer of $2,500 if the director is also a chairperson of a committee, a per-
meeting-attended fee of $2,000 for meetings attended in person, a $500 fee for each
meeting attended via telephone, stock options, and retirement benefits. When you
consider that many executives sit on multiple boards, it's easy to understanding how
their directorship fees can reach into the hundreds of thousands of dollars per year.

Ownership Structure and Its Impact on the Board of Directors

The particular ownership structure of a corporation has a huge impact on the

effectiveness of the board of directors to govern. In a company where a large, single
shareholder exists, that entity or individual investor can effectively control the
corporation. If the director has a problem, he or she can appeal to the controlling
shareholder. In a company where no controlling shareholder exists, the directors should
act as if one did exist and attempt to protect this imaginary entity at all times (even if it
means firing the CEO, making changes to the structure that are unpopular with
management, or turning down acquisitions because they are too pricey). In a relatively
few number of companies, the controlling shareholder also serves as the CEO and / or
Chairman of the Board. In this case, a director is completely at the will of the owner and
has no effective way to override his or her decisions.

Question: What Must be Done at the First Board of Directors Meeting?

Answer:

The first meeting of the board of directors of your corporation (sometimes called an
"organizational meeting") is an important meeting. Typically at this meeting, the Board of
Directors will:
 • Acknowledge that the Articles of Incorporation have been filed (and approved, if
that is the case) with the state in which you are incorporating.
• Designate a specific bank as the official depository for corporate funds.
• Elect corporate officers, usually a President, Vice President, Secretary, and
Treasurer
• Direct the Treasurer to pay organizational expenses
• If your corporation is operating under a different name from the corporate name,
authorize the use of the name under which the corporation is doing business (d/b/a or
fictitious name)
• Approve the corporate by-laws
• Approve the conflict of interest policy and require all board members to sign the
policy.

The board may have other specific business to discuss in addition to these typical
organizational resolutions.

After the meeting, the Board Secretary should distribute the minutes of this meeting for
approval, and after approved, place them in the corporate records book.

Director's Responsibilities and Liabilities

By Russell Sawchuk

If you are active in an industry associations, you may serve one or more terms on the Board of
Directors. The Board of Directors govern most non-profit organizations. If you are asked to serve (or
are currently a director) on any non-profit board, you should be aware of your legal responsibilities and
liabilities. Here are some of the things you should know.

Directors' Rule
Directors do not have to be perfect. Directors only have to demonstrate honesty, good faith, loyalty
and reasonableness of conduct, given the circumstances.

DIRECTORS' DUTIES

Directors manage the business and affairs of an association. A director's duty can be formally stated in
two parts: a) a director must act honestly and in good faith and in the best interests of the association;
and b) a director must exercise the care, diligence and skill that a normally prudent person would
exercise in comparable circumstances.

The officers of the association (secretary, treasurer, president, etc.) have the same duties and
liabilities as directors. This applies whether or not the officer is also a director.

Fiduciary Duty
A director owes the association the duties of loyalty, honesty and good faith. These are fiduciary
duties. The personal interests of any director must not conflict with the association. If this happens, the
director is liable to pay for any loss the association suffers and has to pay to the association any
benefits the director wrongfully received.

In short, directors:

1. Must not take opportunities for themselves that are available to the association.

2. Should not allow their personal interests to conflict with the association's.
3. Should declare their interests in contracts with the association.

4. Should refrain from voting (and probably even taking part in the discussion) on resolutions where
they have a personal interest.

5. Have an obligation to keep association information confidential.

6. Must keep in mind that their decisions must be in the best interests of the members of the
association.

[In my opinion, this is where the greatest risks lie with deer and elk associations. The association is
often the point of contact for requests by buyers for animals and products. The board and/or executive
MUST make ALL association members aware of these opportunities].

Standards of Performance
Directors must exercise the "care, diligence and skill that a reasonably prudent person would exercise
in comparable circumstances." This standard of conduct requires directors to take all reasonable care
applicable to the circumstances, examples being:

1. Directors should regularly attend committee and board meetings.

2. A duty to become informed before acting.

3. Insisting on receipt of enough information on the operations and issues affecting the association to
be able to make informed decisions.

4. Making such inquiries as necessary, including obtaining advice from outside experts, to ensure
decisions are informed.

The result does not have to be perfect because directors are often required to take risks in advancing
the association's interest, but the risks have to be calculated and the decision supportable.

Duty to Manage
Directors, as a Board of Directors, manage the business and affairs of the association. Practically
speaking, it is impossible for the board to attend to every detail of the organization's operation.
Generally, the role of the board is more one of supervision than of hands-on management.

The board may delegate duties to officers but the board can not give up its general duty to manage. In
other words, directors should not abdicate their duty though excess or irresponsible delegation.

Reliance on Professional Advice

Sometimes, a director's standard of performance on technical or complicated matters will be good
enough if the director relies on others, e.g., accountant, lawyer, engineer, etc.

However, a director must still make sure advice is obtained from professionals who are independent
and have appropriate experience and expertise. Directors can not ignore their own knowledge of the
facts or fail to exercise responsible judgment. In the end, directors' decisions can be supported by
professional advice; but the decision can not be delegated to such professionals.

DIRECTORS' LIABILITY

General tort principles can make directors personally liable if they have intentionally or negligently
caused harm to third parties. Examples of where directors can be held personally liable for damages
include:
1. fraudulently inducing the association to breach a contract;
2. improper or unjust dismissal of employees; and
3. libel and slander, and so on.

Please note that directors, who act in good faith and within the scope of their authority, will not be held
liable for the tortuous acts of the association. It is only when directors act in bad faith or outside the
scope of their authority, will they have a problem. For example, an employee may be fired without just
cause, but the dismissal may be in the best interests of the association.

Statutory Liability
There are numerous federal and provincial laws under which directors and officers can incur personal
liability. Most of the statutes make directors civilly liable for failing to ensure the association does what
the lay says it should. Some legislation provides quasi- criminal liability if the director authorizes,
directs, participates or acquiesces in the offence.

LIABILITY AVOIDANCE

There are three ways directors can reduce the risk of liability - due diligence, disclosure of personal
interests and self defense.

Due Diligence
Mistakes happen. Directors will not be liable for errors made in circumstances where they acted
honestly, in good faith and made reasonable efforts to make an informed decision that was in the
association's interests. Simply put, assume some directors face personal lawsuits because they made
a bad decision. If the bad decision was made after due diligence, the directors should be all right.

Due diligence can be established if the record or evidence shows the directors made an informed
decision. This is demonstrated by:

1. obtaining necessary information relating to the issues involved;

2. examining the information;
3. making inquiries;
4. where appropriate, seeking outside professional advice; and
5. taking the time necessary to ensure that the decisions are informed decisions.

It helps if directors put in place systems to address compliance and that the systems are periodically
reviewed for adequacy. That is why a Director's Handbook, including various check sheets, are
commonly developed by societies and associations. Of course, if check sheets are available and not
followed, then the directors will likely pay.

Disclosure of Personal Interests

Directors must disclose any personal interest they may have in association dealings at the first
opportunity in writing. Alternatively, the director can disclose the interest orally and request the nature
and extent of the interest to be entered in the minutes of a meeting.

A director with a material interest must not vote on any resolution to approve the contact. If a director
or officer does not disclose his interest and the contract is approved then:

1. the contract could be voided because the conflicted director is present or even just counted in
determining the quorum at the meeting authorizing the agreement; and

2. the director could have to pay the association any profit he made from the contract.

It is a good idea for the association to maintain a register of disclosures. The register should be open
to examination by members as well as directors.
Self defense
A director who is present at a directors' meeting is deemed to have consented to resolutions passed or
actions taken unless:

1. the director requests that an abstention or dissent be entered in the minutes;

2. the director sends written dissent to the secretary of the meeting before the meeting is adjourned;

3. the director sends a dissent by registered mail or delivers it to the registered office of the association
immediately after the meeting is adjourned, or

4. the director otherwise proves that he or she did not consent to the resolution or action.

A director who votes for or consents to a resolution or action is not entitled to dissent. So, if you think
the Board is wrong, it is not enough to abstain - vote against the motion and make sure the vote is
recorded.

INDEMNITY AND INSURANCE

There are steps that can be taken to shield a director from paying for mistakes. Unfortunately, the
protection only helps the wallet. The hassle, inconvenience and waste of time incurred dealing with the
problem still remains.

Indemnity
An association may indemnify a current or former director or officer against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by
the director in respect to any civil, criminal or administrative action if:

1. the director acted honestly and in good faith with a view to the best interests of the association; and

2. in the case of a criminal or administrative action that is enforced by a fine, the director had
reasonable grounds for believing his or her conduct was lawful.

A couple of things can be done to ensure that a director does not face personal loss. First the
association's by-laws should state that if a director's actions meet the statutory fiduciary requirements,
the director would be indemnified. Second, protection for a director may be improved by an agreement
for indemnification between the director and the association.

Now the only problem is whether or not the association has the money to pay the director back. This
leads to the topic of directors' insurance.

Insurance
An association may purchase and maintain insurance for the benefit of current and former directors
against liability incurred in the capacity as a director or officer of the association. Of course, the
general exception still applies. The director must act honestly and in good faith and in the best
interests of the association, otherwise the insurance will not cover the problem.

Contact your insurance agent for more information and options available.

Risk Management
Risk management is not buying insurance or winning lawsuits. It is protecting and conserving the
association's resources and providing membership services sensibly. The purpose of risk
management is to improve your operations by having risks acknowledged and controlled. Remember,
insurance should be the last decision - not the first - otherwise it is substituting action for thought.
Acting as a Director
If you are to act in a responsible manner as a director of an incorporated non-profit organization, follow
these steps:

1. Attend all board meetings.

2. Ensure that you receive and read, prior to meetings, all documents and reports on which voting will
take place.

3. Review with care all minutes of the meetings.

4. Keep notes of your impressions of the meetings.

5. Keep a notebook of all minutes and other important documents.

6. Insist on written professional opinions from specialists on whose advice the Board is expected to act
on.

7. Insist the minutes record any disclosure, dissent, or refrain from voting by you or any other member
of the Board.

8. Vote against any disbursement if there is a question of the insolvency of the corporation.

9. Send a letter by registered mail to the non-profit corporation if the Secretary or Chairperson refuses
to record your disclosure, dissent or refrain from voting.

10. Know the nature and extent of the association by-laws and policies.

11. Install internal controls to oversee cheques and execution of contracts.

12. Maintain a director's manual containing all corporate documents and relevant information, and
ensure that is kept up to date.

13. Comply with the duty of confidentiality for all corporate information.