ORGANS OF THE

COMPANY:
DIRECTORS
• The Act defines a director as a person who has been appointed to direct and administer the
business of a company – sec 179.

• A person who is not a duly appointed director may be saddled with the duties and liabilities
of directors if:
• They represent or (hold themselves out) to be directors, or
• They knowingly allow themselves to be held out to be directors; or
• They issue directives or instructions that the duly appointed directors are accustomed to
acting upon.
• Such persons although not duly appointed directors are considered de facto
directors.
Commodore v. Fruit Supply: the name of a non-shareholder who had not been appointed a director was
printed on the company’s letterhead as a director. This person was allowed to transact business for the company. The court
held that he was a director and that his acts were binding on the company unless the person with whom he dealt knew or
should have known of the irregularity.

• Unless the regulations of the Company require otherwise, a director need not be a
shareholder or member of the company. – sec 183(1).

• Where the Regulations of the Company require a director to hold a specified amount of
share, the director shall acquire that amount of shares within 2 months of his appointment.

• A company shall have at least 2 directors

Appointment of Directors
• A person’s consent in writing must be obtained before his
appointment as a director. – sec 181.

• The first directors are to be named in the Regulations - sec

181(2).

• The Regulations may provide for the appointment of a

director(s) by any class of shareholders, debentureholders,
creditors, employees etc.

• A casual vacancy in the Board may be filled by continuing

director(s) or by an ordinary resolution of company in general
meeting – sec 181 (5)
Types of Directors
• Substitute Director
• Is appointed by the Company unless the Regulations
provide otherwise. A substitute director is a deputy for the
named director and acts as a substitute for the named
director in the absence of the named director.

• A substitute director can attend meetings if his principal is

present but cannot vote.

• He is appointed and removed the same way as directors

and does not cease to be a director by reason of the fact
that the director for whom he is a substitute ceases to be a
director.
Types of Directors
• Alternate Director
• The alternate director is appointed by the named director unless the regulations
of the company prohibit such appointment – sec 188.

• The appointing director (appointer) may appoint an alternate director in

anticipation of his absence from Ghana or due to his inability to act as a director.

• The appointment of the alternate director must be in writing, signed by both the
appointer and the appointee and lodged with the company.

• An existing director may be appointed as an alternate director, in which case he

shall have an additional vote for each appointment. But an alternate director
cannot appoint another person as an alternate director (delegatus non potest
delagare).

• An alternate director shall not attend or vote at director’s meetings or committee

meetings of directors if his appointer is present.
• An alternate director may act for at most 6 months.

• An alternate director may be an exiting director or any other person

approved by resolution of the board of directors as an alternate
director.

Executive Director
• This is a director who holds office or a place of profit in the company
other than the office of an auditor.

• An executive director can get salary, commission, share of profits, or

participate in the company’s pension or retirement schemes.

• A company is entitled to have executive directors unless prohibited by

the Regulation of the company.

• A director who also serves as managing director, sales manager,

secretary or accountant is an executive director.
Managing Director
• This is a director to whom the other directors have entrusted to
and conferred on any or all the power(s) exercisable by the
directors with such terms and restrictions that the board of
directors deems fit.

• Sec 4 of the First Schedule to the Act defines a MD as a director

to whom it has been delegated some of the powers of the
board of directors, to direct and administer the business of the
company.

• The board of directors may revoke or vary all or any of such

powers conferred on the MD

• A company is permitted to appoint a MD unless prohibited by

its Regulations.
Competence of Directors
(disqualification)
• The following persons shall not be competent to be appointed or to act as a director of a
company;
• An infant (a person under the age of 21 but under the constitution, the age of majority is 18);

• Any person found by a competent court to be a lunatic or of unsound mind;

• A body corporate;

• Any person in respect of whom an order shall have been made under sec 186 of the Act so long as
such order remains in force unless the leave to act as director had been given by the court. Sec 186
relates to restraining fraudulent persons from managing companies. Specifically, the following
persons are prohibited from becoming director of a company unless with the leave of the court:

• a person is convicted on indictment, whether in Ghana or elsewhere, of any offence involving fraud or
dishonesty or any offence in connection with the promotion, formation or management of a body
corporate, or
• a person is adjudicated bankrupt whether in Ghana or elsewhere, or
• it appears that a person has been guilty of any criminal offence, whether convicted or not, in relation to any
body corporate or of any fraud or breach of duty in relation to a body corporate

• An undischarged bankrupt, unless he shall have been granted leave to act as director by the court by
which he was adjudged bankrupt.
• The Act imposes penalties when a disqualified person acts as a
director.
• The disqualified person himself faces up to 5 years in jail and/or a
fine not exceeding a prescribed amount.
• The company in default faces a fine not exceeding a prescribed
amount;
• A penalty is imposed on the duly appointed director(s) in default.
Vacation of office as a director – sec 184
• A vacation may occur in the office of director either upon the expiry of the term to which he
is appointed to serve or through other means such as death, resignation, the director
becoming incompetent (disqualified).

• A vacancy which occurs other than by the expiry of the director’s term is called a “casual
vacancy”.

• Casual vacancies may be filled by the continuing director(s) or by the ordinary resolution of
the company in General Meeting. – sec 181(5).

• Where the directors are exercising their power to fill a casual vacancy, they should satisfy
themselves that the candidate they propose to fill a casual vacancy is a person of integrity
and suitable as director.

• If the casual vacancy is to be filled by appointment by a class of shareholders,

debentureholders, creditors, employees or other person, then in the interim, pending such
appointment, the continuing directors may appoint a director to fill the casual vacancy but
such director so appointed by the existing directors shall serve for as long as a director has
not been appointed by the class of shareholders, debentureholders, creditors etc.
Duties and Powers of Directors
• Directors are vested with all powers that are necessary and
incidental to managing and directing the affairs and business of a
company – sec 137. Their powers are therefore broad but not
unlimited.

• Directors owe fiduciary duties to the company and are required to

observe the utmost good faith in any transaction with the
company or on behalf of the company.

• As fiduciaries, directors’ must:

• Avoid conflict of interest and duty;
• Not make secret profits or take bribes;
• Keep proper accounts;
• Take reasonable care in management of the company’s affairs
• Notable among directors’ duties are:
1. Before a company commences business, the directors shall prepare or cause to be
prepared a return in duplicate setting our certain particulars for filing with the
Registrar – sec 27;
2. Before a company commences business, the directors shall prepare a declaration that
they have fulfilled the minimum capital requirement – sec 28
3. They shall convene the first AGM within 18 months of incorporation – sec 149;
4. After the first AGM, the directors shall convene an AGM every year and any event
within 15 months of the last AGM – sec 149(1)
5. Directors may convene EGM whenever they think fit (sec 150) or when requisitioned by
members (sec 271 and sec 297);
6. Directors shall cause to be circulated to members and debentureholders every year the
company’s financial statements and director’s report on the financial statements (sec
132) and the auditors’ reports on the financial statements (sec 133)
7. The directors shall ensure that the company keeps proper books and accounts and shall
cause full and true accounts to be kept of monies received and expended by or behalf
of the company;
8. Directors shall deliver or make available to the company’s auditors the books, accounts,
vouchers and any information or explanation sought by the auditors – sec 136(1)
9. They may fill a casual vacancy on the board of directors – sec 180(5)
10. They shall file or ensure filing of various documents with the Registrar of Companies
including the Register of Members, written contract regarding true value of shares that
were not paid for wholly in cash, stated capital, court orders, charges created by the
company etc.
11. They shall maintain or cause to be maintained various documents at the registered
office of the company. These include Register of Members, Register of
Debentureholders, Register of charges etc.

12. Every director or former director shall provide the company with written notice of
matters relating to himself to enable the company prepare particulars of directors’
emoluments and pensions (sec 128, 129, 130);

13. In the event of an amalgamation or arrangement of the company, the directors must
provide information to the members and/or creditors of the company including a
statement explaining the effect of the arrangement or amalgamation as the case may
be;
Breach and Remedies
• Where a director commits a breach of duty under sections 203 -205, the director and
any other person who knowingly participated in the breach is liable to compensate
the company for the loss it suffers as a result of the breach;

• The director shall account to the company for any profit made by the director as a
result of the breach (also referred to as the duty to account).

• A contract or any other transaction entered into between the company and the
director in breach of the duty may be rescinded by the company.
Director’s Meetings
• A company’s Regulations may set out the provisions relating to Directors' Meetings which, may
either amplify or vary the provisions in the Act.

• Directors may meet in Ghana or elsewhere

• The Directors may delegate any of their duties to committees of Directors and impose limits on and
set regulations for the committees

• Directors’ Meeting may be convened by any Director. Alternatively, a director may requisition the
secretary to call a meeting.

• Directors who are absent from GH are not required to be served with notices of directors’
meetings.

• The quorum for directors’ meetings is 2, unless the Regulations provide otherwise.

• A quorum is always required both for the commencement and continuation of directors’ meetings
to conduct the general business of the company.

• However, the continuing directors are exempted from fulfilling the quorum requirement if the
remaining number of directors is below the quorum and the continuing directors seek to increase
their number or summon a general meeting.
• The directors may elect one of their number to be chairman and determine the period
he is to hold office. But if no chairman is elected by the board, or the chairman is late to
a board meeting by more than 5 minutes, the directors present may choose one of their
number to chair that meeting.

• Attendance and voting by proxy are prohibited at Directors’ Meetings.

• Matters are decided at meetings by majority vote and should there be a tie, the
Chairman has a casting vote.

• Provision is made for directors to determine matters without the necessity of attending
board meetings. As such, a resolution in writing, signed by ALL the directors shall be
valid and effectual.
Tutorial Questions
1. Who is a director? Write short notes on defacto director,
substitute, alternate, executive and managing director.
2. Who is disqualified from being a director?
3. What does “vacation of director” mean? How may it be
filled?
4. What are directors’ fiduciary duties? What are directors’
statutory duties?
5. Comment on the following regarding directors meetings:
quorum, chairman, casting vote, proxy vote, adjournment.
6. Who may summon directors’ meeting and how.