Board / management structure

Typical management structure

Typically, the management of private limited companies is carried out by a board of directors and supervision by a supervisory board, made up of an odd number of members, elected by shareholders at a general meeting.

One of the directors is appointed as Chairman of the board of directors.

Last modified 1 Mar 2021

For a proprietary company that has more than one director, the board is a unitary structure made up of all the company's directors acting as a board.  Broadly speaking, each director has the same obligations and accountability to the company, in that Australian law does not explicitly distinguish between executive and non-executive directors.  However, the legal tests for directors' duties can involve both subjective and objective elements, so in practice the standard of care expected of each individual director may vary based on the director's office held and their specific responsibilities within the corporation, as well as the circumstances of the corporation itself.

Directors' duties are imposed on directors individually, and Australian courts will scrutinise the conduct of directors individually in assessing whether or not each individual director has fulfilled their duties.  Nonetheless, generally accepted principles of good corporate governance in Australia favour the board striving to act as a high-performance team (subject to each director fulfilling their individual duties).

No 'supervisory board' is mandated in Australia, and employees and other stakeholders are not ordinarily represented at board level.

Last modified 8 Feb 2021

The directors are collectively responsible for the management and operations of the company and for ensuring that the company meets it statutory obligations. A GmbH typically has a unitary board structure.

Last modified 8 Feb 2021

A private limited liability company in principle consists of a one-tier structure made up of one or more directors.

In the case of a public limited liability company, it is possible (but not common) to choose between a one-tier structure (consisting of a board of directors or a sole director) or a two-tier structure (consisting of a supervisory board and a management board).

Last modified 8 Feb 2021

The management of the company’s affairs is generally entrusted to the directors. Legally, directors as the board are agents of the company. It is in this capacity of agents that the law imposes certain legal duties on them.

Last modified 1 Mar 2021

In Chile, the only permitted board structure is one-tier. Even when the law does not expressly state that it is a unitary board, there is no discussion about this.

There is only one mandatory board committee for certain listed corporations. This duties and faculties of this directors' committee include a mix of accounting and compensation matters and the committee must comprise at least three members, the majority of which must be independent directors.

Finally, the company's bylaws may establish committees of the board and specify their functions and composition.

Last modified 5 Apr 2021

An s.r.o. is managed mainly by directors, whose duties are determined by the General Meeting, comprising of all shareholders.

A supervisory board may be established if required by the articles of association, but it is not required by law. This however does not apply to a joint stock company (akciová společnost in Czech), where a supervisory board (or an administrative board, depending on the form of corporate governance) is required.

Last modified 8 Feb 2021

The Danish Companies Act provides the possibility for a private limited liability company to adopt a governance structure where the company is managed either by a board of directors (in Danish bestyrelse), which appoints an executive board to be responsible for the day-to-day management of the company, or an executive board (in Danish direktion).

Both governance structures are common in a private limited liability company.

Last modified 8 Feb 2021

Boards of Finnish private companies are unitary structures made up of all the company's directors except the managing director.  Each member of the board of director has generally the same obligations and accountability to the company.

If the board of directors consists of more than one ordinary members, a chair of the board must be appointed. The chair has a duty to see that the board is convened when needed and issues to be handled at the board meeting are prepared.

The board is responsible (on a collective basis as a board) for the high-level management and operations of the company and for ensuring that the company meets it statutory obligations.

The managing director is responsible for day-to-day operations and other obligations specified in the law.  If a managing director is not appointed, these responsibilities and obligations fall to the board of directors.

A private company may also have a supervisory board, but that is very uncommon.

Last modified 8 Feb 2021

The typical management structure of a SAS consists of one President (mandatory under French law) who/which may be assisted by one General Manager.

In addition, in group structures, we often see supervisory boards created at the level of the holding company, in particular in order to provide for the prior approval of such supervisory board of important decisions made by legal representatives of the group entities.

Last modified 8 Feb 2021

Management board

Typically, a GmbH only has managing directors forming the management board. In principle, all managing directors are jointly responsible for the management of the company. It is, however possible to delegate certain tasks/fields among themselves. Nevertheless, the managing directors who are not specifically in charge of such tasks/fields have to supervise such managing director who has been accorded with the respective responsibility. In contrast, certain fundamental duties (such as filing for insolvency if the GmbH becomes insolvent) cannot be delegated at all.

Supervisory board

It is possible to implement an optional supervisory board. If the GmbH is subject to German Co-Determination Law (Mitbestimmung), the implementation of a supervisory board is mandatory and the following ratios apply:

  • If the GmbH has more than 500 employees, a third of the members of the supervisory board must be employee representative
  • If the GmbH has more than 2000 employees, half of the members of the supervisory board must be employee representatives.

Advisory board

It is also possible to establish an optional advisory board. Such corporate body is particularly common in private equity contexts.

Last modified 8 Feb 2021

Boards of Hong Kong private companies are unitary structures made up of all the company's directors. Each director has the same obligations and accountability to the company. The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations. The law does not distinguish between executive and non-executive directors. There is also no specific role for supervisory directors.

Last modified 8 Feb 2021

  • Strategic management: Board or individual directors. As noted in Minimum/maximum number of directors, in the case of limited liability companies (kfts) strategic management is in the hands of either a Board or one or more (individual) directors. In the case of private companies limited by shares (zrts), shareholders usually set up a Board; however, sometimes they appoint a single director (vezérigazgató) instead of a Board.
  • Supervisory Board:
    • With monitoring functions. The primary function of this body is to monitor/oversee the directors on behalf of the shareholders; formation of this body is mandatory in certain limited cases (e.g. if the average annual number of full time employees exceeds 200; state owned companies) and optional in most cases.
    • With decision making powers. To provide flexibility, Hungarian law allows the shareholders to subject certain decisions of the Board/directors to the consent of the supervisory board or to allocate certain decisions altogether to the supervisory board (instead of the Board) creating thereby a divided decision making system; the foregoing flexibility is sometimes used of as a compromise governance system where one shareholder(group) controls the Board, the other shareholder group controls the Supervisory Board.

Last modified 8 Feb 2021

Boards of Irish private companies are unitary structures made up of all the company's directors.  Each director has the same obligations and accountability to the company.  The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations.

Last modified 8 Feb 2021

The management body of a joint stock company (SpA) can be structured according to one of the following systems:.

  • Traditional system. The shareholder meeting will appoint a management body (composed either of a sole director or a board of directors) and a panel of statutory auditors with the function of ensuring that the company is managed in compliance with the law, company by-laws, and standards of proper management. The panel of auditors usually carries out its control activities only towards management. Accounting control activities are carried out by an external audit body appointed by the shareholders’ meeting. However, if certain conditions are met, the panel of auditors may also be required to carry out accounting control activities. The board of directors usually delegates managing powers to an executive committee (comitato esecutivo) or to a CEO (Amministratore Delegato). In this case the managing functions are carried out by executive directors while the board retains supervising and advisory functions.
  • Dualistic system (sistema dualistico). This is a two-tier management structure. The shareholders’ meeting appoints a supervisory board (consiglio di sorveglianza) which is responsible for ensuring that the company is managed in compliance with the law, company by-laws and standards of proper management. The supervisory body must appoint the management board (consiglio di gestione), which is responsible for the company's management. The supervisory body is also responsible for the approval of the annual financial statements. The shareholders' meeting must also appoint an external auditor (usually, an auditing firm) carrying out accounting control activities; such activities cannot be, in any case, carried out by the supervisory body.
  • Monistic system (sistema monistico). This is a one-tier management structure. The shareholders' meeting appoints a board of directors (consiglio di amministrazione), which will manage the company. The board of directors will appoint an internal audit committee (comitato per il controllo sulla gestione) from among its independent and non-executive members. The shareholders' meeting must also appoint an external auditor (usually, an auditing firm) carrying out accounting control activities.

If company’s by-laws do not specify the management system adopted, the traditional one applies.

The management body of a limited liability company (Srl) can be appointed in one of the following ways:

  • A sole director.
  • A board of directors.
  • Two or more directors acting jointly or severally to manage the company but not forming a board of directors.

A supervising body is only appointed if required by the company's by-laws or if the company meets specific requirements.

Last modified 8 Feb 2021

A KK may determine whether to operate with or without a board of directors as long as the KK is not a public company (if the KK is a public company, it must have a board of directors).

A KK with a board of directors can establish an audit and supervisory committee or three committees (a nominating committee, an audit committee and a compensation committee). However, it is not very common for local subsidiaries of foreign corporations to appoint committees.

Last modified 8 Feb 2021

Boards of Kenyan private companies are unitary structures made up of all the company's directors. Unless otherwise specified in a shareholders’ agreement, each director has the same obligations and accountability to the company. The directors are responsible (on a collective basis) for the management and operations of the company and for ensuring that the company meets it statutory obligations. Kenyan law has no provision for supervisory boards.

Last modified 16 Jun 2021

Boards of Luxembourg private limited liability companies are unitary structures made up of all the company’s managers. Each manager has the same obligations and accountability to the company. The managers are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets its statutory obligations.

Supervisory boards are common for public limited liability companies (sociétés anonymes) but Luxembourg company law does not provide for such management structure for private limited liability companies. The articles of association of the company can however provide for the creation of supervisory/advisory board which would be an internal body and would merely hold an advisory and supervisory function. Although it may issue recommendations and views to the board of managers, the board of managers would not be bound by them.

Last modified 8 Feb 2021

Boards are unitary structures made up of all the company's directors. Each director has the same obligations and accountability to the company (despite the fact that internally the duties can be structured differently, in the case of executive and non-executive directors). The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations.

The fiscal body or statutory auditor is responsible for financial oversight and is mandatory for limited liability share companies. For limited liability quota companies a fiscal body/statutory auditor is only mandatory if the company has 10 or more quotaholders and/or issues bonds.

Last modified 19 Aug 2021

There are three possible management structures:

  • The company has one corporate management body, being the board, which consists of executive directors (uitvoerende bestuurders) only.
  • The company has a one-tier board structure, whereby the board consists of both executive (uitvoerende bestuurders) and non-executive directors (niet-uitvoerende bestuurders) operating from within one corporate body.
  • The company has a two-tier board structure. The board consists of executive directors and the supervisory board, as a separate corporate body, consists of non-executives called supervisory directors (commissarissen).

The main reasons for a company to opt for a one-tier board structure are either:

  • The Large Company Regime applies and hence it is mandatory to appoint either a one-tier board or a two-tier board.
  • The supervision of the executive directors by the non-executives is more practical (in terms of information sharing etc.) if the non-executives and executives are positioned within the same corporate body.

Furthermore, the non-executives may be more inclined to perform well, as they are considered part of the board and therefore subject to a lower threshold for directors' liability. 

The main reasons for a company to opt for a two-tier board structure are either:

  • The Large Company Regime applies and hence it is mandatory to appoint either a one-tier board or a two-tier board.
  • The separation of supervisory directors and executives in two separate corporate bodies may provide for a more independent and objective view of the supervisory directors.

Last modified 8 Feb 2021

Boards of Nigerian companies are single-tier structures made up of all the company's directors who individually have the same duties and obligations to the company.  The directors are also collectively responsible for the management and operations of the company and for ensuring that the company meets it statutory obligations. The board may appoint one or more of its members to the office of managing director and may delegate its powers to such managing director to manage the daily operations of the company.

Last modified 1 Mar 2021

A Norwegian private limited company normally has, at a management level, a system consisting of a board of directors and a general manager (managing director).

The company must have a board of directors, comprising of one or more members. If the board of directors consist of at least two directors, the board of directors must have a chairperson. The chairperson is elected by the board unless the chairperson has been appointed by the general meeting. If the board of directors only consist of one person, such director is automatically registered as the chairperson.

In Norwegian private limited companies the board of directors can choose to have a general manager. If one is appointed, the general manager is responsible for the day-to-day management of the company. If a managing director is not appointed, these tasks and obligations will fall to the board of directors. 

In Norwegian public limited companies, it is obligatory to have a general manager.  

Last modified 16 Jun 2021

Companies are typically managed by the board of directors, the chief executive officer (or general manager) and one or more managers depending on the company’s size.

Last modified 26 Jul 2021

Management boards of Polish limited liability companies are unitary structures made up of all the company's management board members. Each management board member has the same obligations and accountability to the company. Management board members are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets its statutory obligations.

Last modified 8 Feb 2021

According to the Portuguese Companies Code there three types of management structure:

  • Board of directors and Supervisory Board (Monist Corporate Governance Model).
  • Board of directors, to include an audit committee and a statutory auditor (Anglo-Saxon Corporate Governance Model).
  • Executive board of directors, general and supervisory board and statutory auditor (German Corporate Governance Model).

The most common type of management structure is the Monist Corporate Governance Model.

One of the directors is appointed as Chairman of the Board of Directors.

Last modified 8 Feb 2021

In the case of LLCs: The management body is formed by directors. The directors are not required by law to establish a board of directors.

In the case of JSCs:

  • With a one-tier system – typically, the management body (having executive duties) is represented by the board of directors. However, in the case of delegation of management, the management structure comprises the board of directors and the managers (only the latter having executive powers);
  • With a two-tier system – the management structure comprises the executive board (having executive powers) and the supervisory board (which supervises the activity of the executive board).

When it comes to the management of JSCs, the one-tier system is the most common – however, special provisions apply to publicly listed companies. While the delegation of the company's management to managers is generally optional, for JSCs whose annual financial statements are subject to legal auditing obligations, the delegation of the directors' powers to the managers is mandatory.

Last modified 8 Feb 2021

The basic management structure of an LLC consists of the general participants meeting (or sole participant) and the Director. In general, the appointment of a BoD is not common for an LLC.

Last modified 8 Feb 2021

Boards of Singapore private companies are unitary structures made up of all the company's directors.  Each director has the same obligations and accountability to the company (despite any differentiation in titles of, inter alia¸ “non-executive” and “executive” directors).  The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets its statutory obligations. 

It is common for a Singapore company to appoint a Chief Executive Officer (CEO) and Managing Director to manage and oversee all or part of the company’s business. It should however be noted that the appointment of a CEO does not absolve the board from its liabilities and responsibilities.

Last modified 8 Feb 2021

Boards of South African private companies are unitary structures made up of all the company's directors.  Each director has the same obligations and accountability to the company.  The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations. 

Last modified 19 Apr 2021

A company may have the following types of management body structure:

  • Sole director. The sole director is the sole representative of the company and therefore acts individually.
  • Multiple directors. Either joint and several directors, each one of them can act separately and the actions carried out by one of the joint and several directors will bind the company, or joint directors, who must necessarily act jointly.
  • Board of directors. The board of directors shall not have less than three and no more than 12 members. The bylaws may establish the extract or a minimum and maximum number of members for the board of directors. In the latter case the shareholders shall determine the exact number. In addition, the board must appoint a chairman and a secretary. If the company has a board of directors, directors do not have authority to bind the company unless powers are delegated to them. The board may delegate some of their functions to a managing director/CEO (consejero delegado) or an executive committee (comité ejecutivo). Please note that a board of directors is mandatory for joint-stock companies (sociedad anónima or S.A.) when there are more than two directors and for public listed companies (sociedad cotizada).

Last modified 8 Feb 2021

A Swedish private limited company has, at a management level, a system consisting of a board of directors and a managing director.

The board of directors is responsible for the organisation of a company and management of the company's affairs. Each member of the company's board of directors has the same obligations and accountability to the company. The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company's organisation is arranged so that the company's accounts, asset management, and finances in general are satisfactorily monitored.

A managing director is responsible for the day-to-day management of a company in accordance with guideline and instructions issued by the board of directors. In addition, a manging director may, without being authorised by the board of directors, take measures of an unusual nature or of great significance in view of the scope and nature of the company's operations under certain circumstances.

A managing director must take any measures necessary to ensure that the company's accounts are maintained in accordance with the law and that its asset management is conducted satisfactorily.

If a managing director is not appointed, these responsibilities and obligations fall to the board of directors.

Last modified 8 Feb 2021

Boards of Tanzanian private companies are made up of all the company's directors.  Each director has the same obligations and accountability to the company.  The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations. 

Last modified 1 Mar 2021

Onshore UAE

Boards of LLCs are unitary structures made up of all the company's directors. Each director has the same obligations and accountability to the company pursuant to the LLC's memorandum of association. The roles and responsibilities of directors are largely set out in the LLC's memorandum of association, but directors will typically be responsible for the management and operations of the company and for ensuring that the company meets it statutory obligations.

Dubai International Financial Centre

Boards of DIFC private companies are unitary structures made up of all the company's directors. Each director has the same obligations and accountability to the company. The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations.

Last modified 8 Feb 2021

Boards of UK private companies are unitary structures made up of all the company's directors.  Each director has the same obligations and accountability to the company.  The directors are responsible (on a collective basis as a board) for the management and operations of the company and for ensuring that the company meets it statutory obligations. 

Last modified 8 Feb 2021

The board of directors generally appoints the company’s executive officers, such as the company’s president, chief executive officer, secretary, treasurer and any vice-presidents, to manage the day-to-day affairs of the company.

Last modified 8 Feb 2021

Ukrainian companies have two-tier corporate governance structure. According to the LLC Law, the company’s bodies are the general meeting of shareholders, the supervisory board and the executive body. Establishment of the supervisory board is not mandatory. The LLC Law does not allow the same person to occupy positions in the executive body and the supervisory board simultaneously.

Last modified 8 Feb 2021

Boards of Zimbabwean private companies are singular structures made up of all the company's directors. The directors are accountable (on a collective basis as a board) for the management and operations of the company and for guaranteeing that the company meets it statutory obligations. The board of directors is then managed by a management committee.

Last modified 19 Apr 2021

Angola

Angola

What type of company is typically used in group structures?

In Angola, the most common type of company used in group structures is the private company limited by shares.  This guide therefore focuses on the management of private limited companies.

Last modified 1 Mar 2021

Angola

Angola

What is a "director"?

There is no complete definition of the term "director" in Angolan law.  Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director.

What are the different types of director?

Directors validly appointed as such, through a shareholders' resolution, may be executive or non-executive.

The executive directors are responsible for the management of the affairs of the company.

The non-executive directors are responsible for the general supervision of the performance of executive directors’ duties.

Last modified 1 Mar 2021

Angola

Angola

Who can be a director?

A director must be at least 18 years old.  In the event of a legal person being appointed as a director, it must appoint an individual to exercise the office in their own name. The legal person must share liability with the person appointed by it.

Foreign directors must hold a work visa, ordinary visa or residency card.

Minimum / maximum number of directors

Under Angolan law there is no maximum number of directors. The company’s articles of association may, however, specify a greater minimum number and/or specify a maximum.

The management of private limited companies is carried out by a board of directors, composed of an odd number of members.

It may be agreed in the articles of association that the management shall be exercised by one single director when:

  • The number of shareholders is only two (which can only happen in cases where the State, public companies or entities legally equivalent to the State hold the majority of the share capital).
  • The share capital does not exceed an amount equivalent, in national currency, to USD50,000.00.

Last modified 1 Mar 2021

Angola

Angola

How are directors appointed?

Directors must be appointed by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A resolution appointing a director must be filed at the company’s registry office.

Directors must be appointed for the period fixed in company’s bylaws, which must not exceed four calendar years with re-appointment being permitted.

How are directors removed?

Any member of the board of directors may be dismissed (either with cause, or without cause) at any time by means of a resolution approved by the company's shareholders (via a shareholders' general meeting or by unanimous written resolution).

A director may also resign at any time through the issuance of a resignation letter addressed to the Chairman of the board of directors, or in case of the resignation of the Chairman, to the company’s audit board or audit committee.

The resignation or the resolution on director’s dismissal must be filed at the commercial registry.

Last modified 1 Mar 2021

Angola

Angola

Typical management structure

Typically, the management of private limited companies is carried out by a board of directors and supervision by a supervisory board, made up of an odd number of members, elected by shareholders at a general meeting.

One of the directors is appointed as Chairman of the board of directors.

How are decisions made by directors?

The manner in which directors can make decisions is set out in the company's bylaws.  In private companies limited by shares, the bylaws typically provide directors with flexibility to determine between themselves how decisions are made – whether by physical meeting, telematic means (provided that the company ensures the authenticity of declarations and the security of communications, registering the content of all interventions) or an unanimous written resolution.

Directors must meet at least once a month, unless otherwise provided in company’s bylaws.

The validity of the resolutions of the board of directors depends on the presence of the majority of its members.

In relation to the minimum quorum, the board of directors must not approve resolutions without the absolute majority of votes of the directors present.

Authority and powers

The board of directors has exclusive and full powers to represent the company.

The powers of representation of the board of directors are performed jointly by the directors.

Acts performed by the directors, on behalf of the company and in the use of the powers conferred upon them by law, shall bind the company before third parties, irrespective of any limitations that may be established by the articles of association or by decisions of shareholders, whether published or not.

Directors shall bind the company if, by affixing their signature, they indicate that intention.

Delegation

Subject to Angolan law restrictions, and unless otherwise provided in the bylaws, the board of directors may delegate powers to one or more directors to deal with certain managing matters. However, the board retains overall responsibility for the company's operations and management.

The board of directors can also appoint attorneys to perform certain acts or categories of acts, without the need for an express contractual clause.

Last modified 1 Mar 2021

Angola

Angola

What are the key general duties of directors?

The key duties of a director are set out in the Angola Companies Law, pursuant to which the director:

  • Must observe a duty of care towards the company, demonstrate capability, technical competence and an understanding of the company's business considered appropriate for the role, and execute its tasks with the diligence of a careful and earnest manager.
  • Must observe a duty of loyalty towards the interests of the company, serving the long term collective interests of the shareholders and taking into consideration the interests of other stakeholders such as employees, clients and creditors by ensuring the sustainability of the company. As a specific realization of this duty, the directors must not pursue or develop, directly or indirectly, other activities in direct competition with the company, unless duly authorized by the general meeting of shareholders.
  • Must carry out any acts deemed necessary or appropriate to achieve the corporate purpose in line with the resolutions adopted by the shareholders, the bylaws and the applicable law.
  • Are responsible for drafting merger and spin-off plans, in addition to other documents required or appropriate for the full legal and economic transparency of the transaction, as well as preparing a report in case of change of the company's legal form (i.e. a change to a different type of company).
  • Are responsible for performing and executing all managing acts not specifically reserved by law or bylaws to the general meeting of shareholders.
  • Are responsible for, following a shareholders resolution (except an unlawful resolution or resolutions that are not compliant with the company's by-laws), taking all necessary measures to execute such resolution, as promptly as possible (namely resolutions making any amendments to the company’s bylaws).

In addition, if agreed by the shareholders and set out in the company’s bylaws, the directors must also decide on and implement:

  • The acquisition, disposal and encumbrance of real estate of the company.
  • The disposal, encumbrance and lease of the business establishment of the company.
  • The subscription or acquisition of other companies' shares or the disposal and/or encumbrance of these shares.
  • The establishment of subsidiaries, agencies, branches or other local forms of representation of the company.

In general, the directors are bound to manage a company in a professional and diligent way, which includes compliance with all legal, statutory and contractual requirements.

What are directors' other key obligations?

The directors are responsible for preparing the annual reports and accounts and other financial statements required by law in respect of each financial year, and must submit them to the general meeting of shareholders and supervisory board, within three months from the end of each financial year, or within five months for companies that submit consolidated accounts or that use the equity method.

The directors are also responsible of preparing and submitting a proposal for the allocation of profits and/or handling of losses to the shareholders, in respect of each financial year.

Transactions with the company

Whenever there is a conflict of interest between the company and a director, the director shall advise the Chairman of the board of directors and abstain from voting on the resolution concerning that conflict.

The company may only grant loans or credit to directors, make payments on their account, guarantee obligations that they have contracted or make advances to them on account of the respective remuneration, up to the limit of the monthly amount thereof.

Contracts signed between the company and its directors, directly or through another person, shall be null and void except if they have been previously authorised by means of a decision of the board of directors, in which the director concerned may not participate, and if they have obtained the favourable opinion of the supervisory board.

Last modified 1 Mar 2021

Angola

Angola

Breach of general duties

Directors are severally liable towards the company for the damages caused to the company as a result of their actions or omissions that are not compliant with their legal statutory or contractual obligations, unless they prove that their actions/omissions were not caused with intentional or negligent misconduct.

The directors may also be subject to criminal liability.

A lawsuit against the directors may be brought by:

  • The company – in this case a shareholder’s resolution to bring the lawsuit must be approved by the majority of the shareholders, and the lawsuit must be sought within six months from the date of such resolution.
  • In the absence of a lawsuit sought by the company, one or more shareholders who jointly own, at least, 10% of the share capital  may bring a liability suit against the directors to claim reparation for damages caused to the company.

A company may seek a range of remedies against a director for breach of duty including damages, recovery of misapplied property, accounting for profit made in breach of duty, an injunction to prevent breach and rescission of a contract.

Liabilities on insolvency

If during the course of its management the company goes bankrupt, the directors may incur in liability if the bankruptcy is declared fraudulent or culpable. The crime of fraudulent or culpable bankruptcy is punishable with a penalty of two to eight years' imprisonment.

Other key risks

Personal liability for directors may, in certain circumstances, arise under Angolan legislation including that relating to environmental and health and safety, employment, consumer protection and bribery/anti-corruption.  In certain cases, criminal liability may arise.

A director may also be disqualified by the court from acting as a director or from taking part in the promotion, formation or management of a company.  A disqualification order can be made for a variety of reasons (e.g. conviction for criminal offences relating to the running of a company, persistent breaches of statutory obligations such as filing documents with the companies register, being found liable for fraudulent or wrongful trading and generally for conduct which makes a director unfit to manage a company).

Last modified 1 Mar 2021

Angola

Angola

How can directors be protected from liability?

The board of directors or the shareholders' general meeting may declare null and void or annul defective resolutions, at the request of any director, shareholder with the right to vote or of the supervisory board, made within one year of becoming aware of the defect that serves as its basis.

The general meeting of shareholders may ratify any resolution or substitute an invalid resolution if it does not concern a matter that falls within the exclusive competence of the board of directors.

Directors shall not execute or allow to be executed resolutions of the board of directors that are null and void.

Directors' and officers' (D&O) insurance is also available. It typically provides both cover for individual directors against claims made against them in their capacity as director, including defence costs (which applies when indemnification by the company is not available), and company reimbursement when it has indemnified its directors (subject to an excess/retention). Policy exclusions typically include claims in respect of a director's fraud, dishonesty, wilful default or criminal behaviour.

What practical steps can directors take to avoid liability?

Directors should:

  • Keep informed about the affairs of the company, particularly its financial position, and compliance obligations. Directors should have access to up to date financial information, prepare thoroughly for and regularly attend board meetings and familiarise themselves with key legislation affecting the business.
  • Make full disclosures to the board and shareholders if they have outside positions or interests which may give rise to a conflict of interest and/or if they have a personal interest in any proposed or existing transaction or arrangement with the company.
  • Keep records and take advice – directors should ensure that full written records of board proceedings are made reflecting the reasoning behind key decisions. This should include any alternative courses of action considered. Minutes should also record any disagreement amongst the board and the reasons for that. In addition, directors should ensure that returns and accounts and filed promptly and take professional advice for decisions based on areas outside their personal expertise, for example from legal professionals and accountants.
  • Be aware of, and comply with, any group-wide governance policies. These may cover areas such as health and safety, ethics, bribery/anti-corruption, and human rights. Compliance with them is designed to help directors (and employees) fulfil their duties and obligations and minimise the risk of liability.
  • Act, not only with diligence, but also with loyalty, keeping in mind that they must act always in the interest of the company, taking into account the long-term interests of the shareholders and considering the interests of other subjects relevant to the sustainability of the company, such as its workers, customers and creditors.
  • Also in a group situation, directors should keep in mind that thet must act in the best interest of their group company. Whilst group interests and that company's interests are usually aligned, this may not always be the case (e.g. when their group company's solvency is adversely impacted).  It is important to keep communication and reporting lines as open and clear as possible between parent and subsidiary companies when issues may arise and seek appropriate advice.

Last modified 1 Mar 2021