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Company Management: REMUNERATION OF DIRECTORS

Payment for services of directors depends on the articles and their service contracts, if any. It should always be realised that directors a...

Payment for services of directors depends on the articles and their service contracts, if any. It should always be realised that directors are not servants of the company like ordinary employees.

Therefore the mere fact that one is a dirctor does not imply that he must be paid for it. In the absence of a provision regulating payment of directors, the payment will be in the nature of a gratuity. Managing Directors are usually paid a salary with some percentage of the profits in terms of Article 109 of Table of the first Schedule, the MD is entitled to a salary , commission and participation in the profits as the directors may determine.

Please study section 177 which deals with loans to directors and section 172 which deals with share qualification for directors.
Company Management: REMUNERATION OF DIRECTORS
POWERS OF DIRECTORS
These powers are provided in the articles of association and the Articles of the Companies Act together with the common law.

Articles 81-88 deal with the powers and duties of directors.

The BOD can act in any manner it wishes as long as it does not exceed its powers as granted by the articles. The shareholders have nocontrol over what directors can do it terms of their granted powers. If the BOD does anything that displeases the shareholders, then the powers of the directors may be restricted by alteration of the articles as founded for in section 16. The directors may also be removed from office by resolution of which special notice is required before the expiration of his period of office in terms of section 175(1).

Article 81 table A gives the directors powers to run the company subject only to a regulation of the general meeting. In the case of Shaw v Shaw it was held that a company in a general meeting cannot resolve to override the powers of directors when they have been properly execised.

The company had resolved in a meeting to discontinue an action which ahad been instituted by the directors in a court of law. The court said that some powers may be exercised by directors and some by shareholders in a general meeting. The directors are, however the only ones who can exercise the powers of management if such powers are vested in them by the articles. The shareholders may, if they are unhappy with the decision of the directors, alter the articles, refuse to re-elect them or simply remove them from office. The guiding principle, however, is that there shall be no interference with the directors unless the articles specifically state that they shall be subject to the general meeting.