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Company Management II: Who May become A Director

Section 173 lays down the persons who are disqualified from becoming directors. It provides as follows: ‘(1) Any of the following persons sh...

Section 173 lays down the persons who are disqualified from becoming directors. It provides as follows: ‘(1) Any of the following persons shall be disqualified from being appointed a director of a company.
a) a body corporate,
b) a minor or any other person under legal disability:
Provided that a woman married in community of property may be a director if her husband gives his written consent and that consent is lodged with the Registrar:

c) save with the leave of the court, an unrehabilitated insolvent.
d) save with the leave of court, any person who has at any time been convicted, whether in Zimbabwe or elsewhere, of theft, fraud, forgery or uttering a forged document or perjury and has been sentenced therefore to serve a term of imprisonment without the option of a fine or to a fine exceeding $100.
e) Any person who is the subject of any order under this Act is disqualified.
f) Save with the leave of the court, any person removed by a competent court from office of trust on account of misconduct.”

This list is obviously not exhaustive. The articles may in terms of section 173(4) also lay down further disqualifications such as foreigners or directors of other companies.
Company Management II: Who Mat become A Director
The case of Tengende v Registrar of Companies is illustrative of the stance which the court adopts when dealing with issues of disqualification. In that case, the case, the court said that even when a person has a string of previous convictions, he will not be disqualified by that fact alone. The court will look at the whole character of the person to determine whether he has been rehabilitated, said the the judge in that case.

“In my view, what must be scrutinised herein is the applicants whole character whether it can be said that his word is his bond. In this regard, the petition’s obvious lack of candour or tendency to deceive casts a great deal of doubt whether he is a truly reformed character, one to be trusted with the honest management of the company.”

Certain people are disqualified from being directors because it must be ensured that the company is run by capable, responsible and honest people. The office of director is one of trust. He has a fiduciary relationship with the company hence the demand for the utmost integrity.

It is not always possible for the substantive director of a company to act in that position. He may be on leave, on holiday in another country or he could be ill. This does not mean that the company will go without a director. An alternate director is usually appointed. The definition of a director in section 2 includes an alternate director. He is only however a substitute director, or one appointed to act in the place of the absent substantive director. An alternate director can only be appointed if the articles permit such an appointment. A company must have not less than two directors in terms of section 169(1) However, alternate directors are not included in reckoning the number of directors of a company. An alternate director is bound to comply with all the duties of a director even though he is not counted as a director for purposes of Section 169, he is nevertheless a director by virtues of the definition of a director in section 2.

The Board of Directors consists of the various directors of the company. This is where directors sit ( in a room called the Boardroom) to discuss the affairs of the company. This is where meetings of directors are held. Usually there are executive and non-executive directors although they may be called by various names such as MAnaging Director (MD), Chief Executive etc. Let us consider briefly the offices of these types of directors.

Executives directors or Management executives are officers of the company with a service contract. They work full time for the company hence tey are often refered to as full time directors.

The executive director has knowledge of the company and is usually in that position because of his expertise. He is very powerful and important in the administration and day to day running of the company. The executive director is almost invariably refered to as Managing Director or Chief Executive Officer. The MD is also provided for in Article 108-110.

There is a difference between an ordinary manager and the Managing Director although the difference still is a grey area. A director is under the control of the BOD. He occupies an office which is statutory hence he is legally essential to the company. His powers and duties are defined by law. The ordinary manager on the other hand is merely an employee and is not a legal requirement for a company. He is engaged by the directors for his services hence he is a worker albeit higher up the hierarchy. (Managers of course dislike to be described in this way!)

They are essentially statutory directors. They are rather formalities to fulfill the legal requirements. In large companies, there are usually quite a number of these non-executive directors. As their name suggests, they do not work full time for the company unlike the executive directors. Sometimes they are employed elsewhere on a full-time basis and may even be non-executive directors for several other companies.

Indeed, some of them have “little relevant knowledge” of the companies they direct. (Nkala & Nyapadi). They therefore rely heavily on the MD hence they have been described as “guinea pig” directors. Their powers, and rights which they exercise in the BOD is determined in the General Meeting which is the “ultimate organ of corporate control”.

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