MZUMBE UNIVERSITY

SCHOOL OF BUSINESS (SOB)

DEPARTMENT OF ACCOUNTING AND FINANCE

NAME: MAULID MUSA MNAMBWA

REG NO: 1203290/T.14

COURSE: BAF-PS

SUBJECT: BUSINESS LAW

UNIT CODE: LAW 109

TASK: INDIVIDUAL ASSIGNMENT

QUESTION;

Discuss the legal nature and scope of the roles of directors of company in
handling corporate accounts. In your discussion shade a light on the extent to
which the companies Act assures such a role are properly handled as a means of
preserving the interest of those whose stake is cared by them.
 Company is the corporate body of person formed together to perform a
business for profit or is the collection of association of people or legal person or mixture of both
legal person and collection of people.

Lindley; L J defines company as an association of many persons who money or money’s worth
to a common stock employ it in some common trade or business (for a common purpose] and
who share profit and loss[as the case may be]

Director is a person who is in charge of a particular activity or department of a company, collage

etc. or one group of senior manager who run the company.

Directors of the company is the member of the board appointed to direct the affairs of
the commercial corporation

Directors are of two typical categories that is executive and non-executive directors, but there is
no legal distinction between executive and non-executive directors the difference is that non-
executive do not get involved in day to day running of the business

Executive directors performs operational and strategic business functions such as managing
people looking after assets, hiring and firing and entering into contracts.

Non-executive directors use their experience and expertise to provide independent advice and
objective and they usually have a role in monitoring executive management.

A company always prepares accounts at the end of each year as it stated to its contents of rules
and way of handling books as narrated to the article of association.

The books kept by the company are sufficient to show and explain the company’s transaction
and are such as to;

 Enable directors ensure that any balance sheet, profit and loss accounts and cash
flow statement prepared under this chapter complies with requirement of the act.
 To disclose with reasonable accuracy at any time the financial position of the
company.
The books of accounts should contain:

 Entries of day to day of all sum of money received and expended by the company and
they matters in respect with receipts and expenditures
 All sales and purchases of the company.
 The assets and liabilities of the company.

Corporate account refers to the account that specialize in offering services for companies and
offshores business. It differentiate from personal and investment account lies on the fact that it
provide services targeted directly to business.

The books of accounts should be kept at the registered office of the company or at such other
places in Tanzania, in the company the books and all other records are timely kept according to
the policy of that company that it can be six years or otherwise as stated in section 151 (4) of the
company act of 2002.
Since directors can be executive and non-executive to the sense that they perform
operational and strategic functions such as hiring and firing so they are to handle corporate
accounts so as to bring control and full disclosure of company’s assets.
The following are the roles or duties of directors in handling corporate accounts as stated
in the law of company of 1956 and 2002, any accounting period of a company should be more
than six month but not exceeding eight months as stated in the company act of 2002.
Duties of directors are:
Duty to prepare individual accounts: The directors of the company should prepare
individual accounts at the end of the accounting period so as to determine the financial position
of the company or otherwise, The accounts should be prepared and submitted before the general
meeting of the company as stated in section 166 of the company act 2002 those accounts should
indicate,
o Profit and loss accounts, showing profit and loss made for the year.
o Balance sheet at the end of the last day of accounting period so as to show the
financial position of the company.
o Cash flow statements to show all cash incoming and outgoing to determine all cash
received and spent to that period of trading.
Those accounts prepared should be prescribed by the minister or national board of account and
auditors as stated in section 154(2) of act 2002.
The balance sheet shall give a true and fair view of the state of affairs of the company as at the
end of accounting period
Duty to prepare group account: The director should be having subsidiaries of directors
that to be prepared and presented before the general meeting of the company.
The group accounts comprise the following;
 o Consolidated balance sheet that will show all assets and liabilities of the company at
a given period of time to disclose all assets and liabilities to determine the ratios for
measuring the effectiveness of the company.
o Consolidated profit and loss of the company to show whether the transactions has
resulted to gain or loss of the company.
o Consolidated cash flow, it is used to show the flows of money in the company that
may be either inflow or outflow all these should be determined before a general
meeting to be held and the affairs of the accounts should be shown as stated in
section 155(3) of the company act 2002 and period declaration of section 155(4)
2002 that should not coincide with that of parent company as stated in section 156,
the exception of preparing group account.
The account shall give a true and fair view of the state affairs as at the end of
accounting period.
Where the accounting period of a subsidiary does not coincide with that of parent
company the group account shall, unless the registrar on the application or with the
consent of the parent company
Duty to prepare directors report: The directors report which is to be prepared by
directors should deal with material with any change during the accounting period if company has
interest with members or another company should be clearly stated and if the person being a
director fail to make steps to comply with provisions of subsection (1) he shall in respect in each
offence be liable in conviction imprisonment or to the fine or both.
The director report shall deal, so far with any change during the accounting period in the nature
of the accounting business or in the company subsidiaries or in the classes of the business in
which the company has an interest, whether as member of another company or otherwise.
Duty of Auditors: A company auditors shall in preparing their report carry out such
investigation as will enable them to form an opinion as to;
o Whether accounting records have been kept by the company and proper return
adequate for their audit have been received from branches not visited by them
and,
o Whether the company individual accounts are in agreement with their accounting
records and returns.
Right to demand copies and reports: any members of the company, whether is or not
entitled to have sent to him copies of the companies accounts, and any holder of
debentures of the company, whether he is or is not entitled, shall be entitled to be
furnished on demand without charge with a copy of last annual account of the company,
together with the copy of the director’s report and auditor’s report.

Other duties of directors are

o To act in good faith and not act contrary to the interest of the company.
o To retain discretion
o To preserve the interest of the company
For the case person being a director of a company fail to take all reasonable steps to secure
compliance by the company with requirement of this section 153 or has by his own willful act
being the course of any default of the company there under, he shall in respect of each offence,
be liable and conviction to imprisonment or fine.
Requirement is stated to the section 151 (5) of the company act 2002.
Generally company is an artificial or legal persons, it only act through human being known
as directors, The directors are both trustees and agent of a company ; they act as agent for
transaction and trustees because they are entrusted with money and power of a company.

REFERENCE
 Company act. 12,2002.
 Binamungu c.s.m (2000), Business law, Dar es salaam , National board of Accountant
and auditor(NBAA)
 Ombela J.S and Masawe MP(2013), Elementary company law, Dar es salaam, Trust
publication limited.