Duties and obligations of directors

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.

Last modified 1 Mar 2021

The Act requires every company to keep written financial records that accurately record and explain the company’s transactions, financial position and performance, and enable true and fair financial statements to be prepared and (in some circumstances) audited.  Companies must also prepare a number of reports each year, including (for most companies) a financial report and directors’ report.  Failure to comply with financial record-keeping and reporting requirements can result in civil penalties for the directors, or criminal penalties if the contravention is dishonest.

The Act requires directors of certain companies to prepare and file annual accounts and submit other information to ASIC.  Proprietary companies are categorised as either 'large proprietary companies' or 'small proprietary companies' and their reporting obligations differ.  The test is applied annually and takes into account consolidated operating revenue, value of consolidated gross assets and the number of employees.

Directors can also face personal liability under a range of statutes, including those relating to taxation, superannuation, workplace health and safety, environmental protection and competition laws.

Last modified 8 Feb 2021

The Act requires directors to prepare and file annual accounts and submit other information to the companies register.  The accounts and other information must be submitted to the companies register within nine months after the end of the previous financial year.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

In general, directors are responsible for ensuring that the company complies with its statutory and legal obligations, for example under company law, environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In addition, the directors must comply with, amongst others, the following duties:

  • Convening a general shareholders’ meeting within two months, and preparing of a special report, if the company’s financial position meets certain negative exact criteria (the so-called “alarm bell procedure”).
  • In case of a distribution of dividends in a private limited liability company, the management organ needs to determine that the company will still be able to pay its debts when they become due over a period of at least twelve months (liquidity test).
  • Preparing of all legally prescribed reports (e.g. in case of capital increase, issuance of convertible bonds or subscription rights, cancellation or limitation of the preferential subscription right, issuance/abolition of categories of shares or profit certificates or changing its rights, setting up of the authorized capital, the dissolution of the company, conversion of the company).
  • Preparing of all proposals and legal reporting in case of a corporate restructuring of the company (i.e. (cross-border) merger, (partial) demerger, contribution of a branch or a universality).
  • Ensuring the timely establishment and filing of the annual accounts with the National Bank of Belgium, and take care of all other filings that need to occur in the Annexes to the Belgian State Gazette and the Crossroads Bank for Enterprises.

Last modified 8 Feb 2021

The Act requires directors to keep proper accounting records. This is done by:

  • Correctly recording and explaining the transactions of the company.
  • Ensuring that at any time the financial position of the company will be determined with reasonable accuracy.
  • Preparing financial statements that comply with the Act.
  • Enabling the financial statements of the company to be readily and properly audited.

Ethical duties of directors include:

  • Disclosing any conflict of interests.
  • Avoiding illegal transactions.
  • Abiding by competition laws.
  • Abiding by environmental protection laws.
  • Engaging in social corporate responsibility.
  • Accounting for his monetary gain (other than remuneration).
  • Acting as trustee and giving over collections on company's behalf.
  • Acting honesty and in good faith and in the best interests of the company.; and
  • Not to make use of the company's confidential information.

Last modified 1 Mar 2021

Directors appointed by a shareholders' group have the same duties towards the company and other shareholders as the remaining directors. They are not able to infringe their duties to them in order to defend the interests of the shareholders' group that elected them.

Additionally, the Corporations Act sets out a list of conducts or activities that are forbidden for directors.

Last modified 5 Apr 2021

Directors are obliged to file for insolvency without undue delay after learning or having reasonable cause to learn of the company's insolvency. If the executives do not file an insolvency petition in time, they are personally liable to the creditors for the damage or other harm caused by the breach of this obligation.

Directors must take all necessary measures in order to avert imminent insolvency. If they fail to meet this obligation, then in the event of a declaration of bankruptcy of the company, the court may decide, on the proposal of the insolvency administrator or creditor, that the director in question is personally liable for the fulfilment of the company's obligations.

Last modified 8 Feb 2021

Bookkeeping, financial position and capital reserves

The board of directors must ensure that the bookkeeping and financial reporting procedures are satisfactory, taking due account of the size and circumstances of the company.

The board of directors must also ensure that adequate risk management is established and that the financial resources of the company are adequate at all times, and that the company has sufficient liquidity to meet its current and future liabilities as they fall due. The board of directors must therefore receive on a continuous basis adequate reporting about the company’s financial position and ensure that the existing capital resources are adequate.

If it has been established that the company’s total equity represents less than half of the subscribed nominal share capital, the board of directors and the executive board must ensure that a general meeting is held within six months. At the general meeting, the board of directors must report on the financial position of the company and, if necessary, propose measures that should be taken, including a proposal to dissolve the company.

Yearly assessment of the beneficial owners, annual report and annual general meeting

At the time of incorporation, the information on the beneficial owners of the company must be registered in the Danish public register of shareholder(s) (in Danish: “CVR”). Any changes to this publicly available information must be updated, when required. However, a company is also obligated to assess at least once a year whether any changes to the registered information on legal and beneficial owners have occurred and ensure that the registered information is accurate and up-to date. The result of the assessment must be disclosed at the board meeting where the directors approve the annual report.

The Danish Financial Statements Act prescribes that the board of directors must present the annual report at the annual general meeting for the general meeting’s approval, and that the members of the board of directors must sign the annual report.

The board of directors is also responsible for convening and organizing the annual general meeting in due time for the general meeting to approve and submit the annual report so that the Danish Business Authority receives the annual report within five months after the end of the financial year.

Last modified 8 Feb 2021

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about beneficial owners.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

In addition to day-to-day management, French law requires the President of the SAS (or other person as provided by the bylaws) to prepare and file annual accounts and submit all required information to the competent Trade and Companies Registry, including information about the company's ultimate beneficial owner. The accounts and other information must be submitted to the Trade and Companies Registry within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

See What are the key duties of directors?

Last modified 8 Feb 2021

Below is a non-exhaustive list of key statutory duties that a director of a company is required to comply with under the Companies Ordinance (CO):

  • File return of allotments.
  • Keep proper books of account.
  • Lay before the company at its annual general meeting a profit and loss account and the group accounts.
  • Procure that the balance sheet of the company is approved by the board of directors and signed on behalf of the board by two of the directors of the company.
  • Take reasonable steps to secure compliance with the CO’s requirements in respect of the preparation and content of the directors’ report.
  • Make disclosure if any proposed resolution affects the interests of any director differently from the interests of any other shareholders.
  • File annual returns with the Companies Registrar.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

The director(s) must, among other things,:

  • File the annual accounts (financial statements) of the company with the relevant authority (following the approval of such accounts by the general meeting).
  • Ensure that the data indicated in the company register is up to date (e.g. signatories, company address, registered share capital.
  • Convene the general meeting if they become aware that:
    • The company’s shareholders equity fell below half (kft.)/ two-thirds (zrt) of the registered share capital due to losses (sectoral legislation may set higher limits).
    • The company is threatened by insolvency or has stopped making payments or its assets do not cover its liabilities.
  • Must not acquire any shareholding in a business association -except for listed companies- and must not be directors in a business association whose main activity is the same as that of the company in which they are a director; however, the foregoing are default rules of the Civil Code, so the articles of association may diverge from these. Further, within fifteen days of accepting their appointment, directors must notify any other company in which they are a director or a supervisory board member of such appointment.
  • Must not enter into any transactions in their own name and/or on their own behalf falling within the main activity of the company except for usual transactions in the scope of everyday dealings (corporate opportunities); the foregoing are default rules of the Civil Code, so the articles of association may diverge from these.

Last modified 8 Feb 2021

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders and beneficial ownership.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

The Civil Code sets out other specific obligations, for example to: draft the annual financial statements, regularly keep the corporate books and to attend meetings of the board of directors.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Under the Italian Civil code and other legislation, directors have the duty to adopt all measures necessary to preserve and guarantee the health and safety of employees. These measures include: to make an assessment of hazards for employees; to implement a programme of preventative activities; to reduce or, where possible, to eliminate hazards; and to monitor sanitary conditions of employees.

Directors must also adopt and efficiently implement an organizational and management model which is adequate to prevent the commission of crimes. If such a model is not adopted, and efficiently implemented, the company may be held liable for crimes committed by its directors or employees.

In case of financial imbalance, directors must also operate a “solvency test” before proceeding with a legitimate repayment of shareholders’ loans.

Last modified 8 Feb 2021

The duty to establish internal control systems

Directors of a "’Large Company"’ are obliged to establish and maintain internal control under the Companies Act.  A "Large Company" is generally defined as a company which has: stated capital in the most recent balance sheet of JPY500 million or more; or total liabilities in the most recent balance sheet of JPY20 billion or more.

The internal control system shall include, among others, the following items:

  • Distribution of compliance manuals and training concerning internal rules.
  • Maintaining records of the status of the execution of business so as to enable inspection by a third party, and thereby preventing any violations of law or administrative orders.
  • Properly disciplining any employee who violates the law and building a spirit of compliance within the company.

Last modified 8 Feb 2021

Other key obligations include, to:

  • Keep a register of members, directors, directors’ residential addresses, beneficial owners, debenture holders and charges.
  • Keep copies of documents such as the directors’ contracts of service or memorandum of terms; all resolutions of members passed otherwise than at general meetings; minutes of all proceedings of general meetings; and all documents creating charges.
  • Keep its records in hard copy or electronic form or arrange them in in an appropriate and efficient manner to enable future access. Where the records are kept in electronic form, such records must be capable of being reproduced in hard copy form.
  • Keep proper accounting records. Accounting records will be considered to be proper if they, among others, show and explain the transactions of the company, disclose the financial position of the company and comply with financial accounting standards. The accounting records must be kept at the company’s registered office and open at all times to inspection by the officers of the company. In addition, the accounting records must be preserved for a period of not less than seven years from the date on which they were created.
  • Prepare and file annual returns, annual accounts and submit other information to the registrar of companies within the prescribed time limits.
  • Ensure compliance with other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 16 Jun 2021

The main other key obligations of the managers are to:

  • Prepare each year an inventory indicating the value of all the company’s movable and immovable assets and all the debts it owes and is owed, with an annex summarising all the commitments and debts of the company’s officers, managers and statutory auditors, if any.
  • Prepare the annual accounts (balance sheet, profit and loss account and annex).
  • Establish a report on the company’s business, if required.
  • Submit the annual accounts, the consolidated accounts (if required by law), the management report and the report of the person responsible for auditing the Company (if any) to the general meeting of shareholders for approval, within six months after the end of the financial year.
  • File the approved annual accounts, the management report and the report drawn up by the statutory auditor(s) (if any) with the Luxembourg Trade and Companies Register within one month following their approval by the annual general meeting, and no later than seven months after the end of the financial year.

Last modified 8 Feb 2021

Directors are responsible, among other things, for:

  • Preparing the annual reports and accounts and other financial statements required by law in respect of each financial year. Directors must submit these to the annual ordinary general assembly meeting of shareholders, within three months from the end of each financial year.
  • Preparing and submitting a proposal for the allocation of profits and/or handling of losses to the shareholders, in respect of each financial year.
  • Not implementing any resolution on profit sharing whenever it or its implementation is in breach of the provisions of the Commercial Code.
  • Ensuring that all taxes due by the company and in debt are timely and duly paid and also that all company tax returns, accounts and invoices are filed and submitted to the Tax Authority and filed in accordance with the law.
  • Ensuring the correct organization of the bookkeeping, fiscal control records and other corporate books, such as the minutes book of the general assembly; the minutes book of the management; the minutes book of the supervisory board, if applicable; the register of liens, duties and guarantees; and ensuring that they are made available for consultation by the shareholders for, at least, two hours per day during business hours.
  • Proposing the dissolution and liquidation of the company or that the share capital is reduced, if the accounts of the accounting period demonstrate that the net worth of the company is less than half the value of its share capital, unless the shareholders raise amounts in cash that replenish the assets in equal measure to the share capital value within sixty days following the referred proposal.
  • Ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

In addition to the duties established in the Commercial Code for directors of a company, the director of a share company has certain fiduciary duties as follows:

  • To maintain the confidentiality of information that has not yet been adequately confirmed and that may, when disclosed to the market, influence in a measurable way the price of securities of the company, and ensure that his/her subordinates do not disclose this information.
  • To divulge through the press in the days immediately following the fact, any decision of the general assembly or of the administrative bodies or any relevant facts that occurred in its business that may affect in a measurable way the decisions of investors in the stock market.
  • Not to avail him or herself of information obtained in their function as director in order to gain for themselves or others, advantages through the purchase and sale of securities.
  • Establish an ethical relationship with the minority shareholders in terms of political rights, including the right to vote, rights of representation in governing bodies and those related to property rights.
  • Ensure the protection of the interests of shareholders, employees and other participants in the company, within the powers and status that the law confers, in order to achieve the purpose and function of the company.
  • Make optimal use of capital, by reducing its cost through more stable funding sources.

Last modified 19 Aug 2021

The following duties, in general, can be regarded as other key obligations of the board:

  • Managing the day-to-day operations of the company, subject to possible limitations in the articles of association.
  • Setting out and executing company strategy and policies.
  • Achieving company aims.
  • Responsibility for drawing up and publishing annual report and accounts.
  • Keeping the company's books and accounts.
  • Monitoring the risks, solvency and liquidity of the company.
  • Ensuring the company's compliance with relevant legislation and regulations.
  • Responsibility for the company's financing.
  • Ensuring that other company bodies function well.
  • Representing the company.

Duties of the board can be expanded or limited through the articles of association.

Last modified 8 Feb 2021

Nigerian law requires directors to prepare and file annual returns, financial statements and other corporate information to the corporate affairs commission within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 1 Mar 2021

The directors have to fulfil their obligations with the company’s best interest in mind, and not abuse their position in the company. Abuse would include the following:

  • Members of the board of directors may not adopt any measure which may tend to give certain shareholders or others an unreasonable benefit at the expense of other shareholders or the company.
  • The directors and general manager may not comply with any resolution of the general meeting or another company body if the resolution is contrary to statutory law or the company’s articles of association.

Last modified 16 Jun 2021

Directors must:

  • Prepare the annual report, the financial statements and the proposal for the distribution of profits, if any, to be submitted to the shareholders' meeting.
  • Prepare reports on the advisability of capitalising loans for a capital increase.
  • Convene general shareholders' meetings.
  • Inform the shareholders, if they so request, with reports or clarifications they deem necessary regarding the matters included in an agenda for a shareholders' meeting.
  • Approve any merger or spin-off project.

Last modified 26 Jul 2021

These are duties to:

  • Report changes in company’s data disclosed in the National Court Register. As a rule, this should be done within 7 days after a relevant change has occurred.
  • Report changes in the Central Register of Beneficial Owners. As a rule, this should be done within 7 days after a relevant change has occurred. Relevant filings should be made by sending an electronic form which should be signed with a qualified electronic signature within the meaning of EU Regulation No 910/2014 (eIDAS Regulation) by one of the management board members in accordance with company’s rules of representation.
  • Ensure that the company complies with its other statutory and legal obligations. For instance, this covers requirements under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

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.

Last modified 8 Feb 2021

  • Duty of loyalty/ confidentiality. Directors not only have the right but also the duty to manage the company in compliance with the high standards set out for a prudent and diligent competent director in the best interest of the company.

Directors have a general duty of loyalty towards the company and must exercise their powers in an honest and faithful manner. Directors cannot act in their own interest to the detriment of the company.

Company Law also provides that directors of JSCs must not divulge confidential information and business secrets of the company, both during and after the expiry of their mandate. While not expressly provided by the Company Law, this duty should apply by analogy in case of directors of LLCs, on the basis of their general duty of loyalty.

  • Avoiding conflicts of interests. The Company Law provides specific rules as regards the directors' conflicts of interest but only in case of JSCs. Thus, any director who, directly or indirectly, has interests contrary to the interests of the company in a certain operation, must inform the other directors and the censors or internal auditors about it and refrain from participating in any deliberations on the operation in question.

The director is under the same obligations if he/she is aware that his/her spouse, relatives or kindred up to the fourth degree included have an interest in a certain operation.

While not specifically provided by the Company Law as regards LLCs directors, the loyalty obligation should also imply that the director of a LLC informs the shareholder(s) in case of a conflict of interest and abstains from taking a decision.

In any event, the Civil Code provides, as a general rule, for any type of company, that the director having a personal interest in a matter must inform about it the company and refrain from participating in any deliberations on the operation in question.

  • Non-competition with the business. According to the Company Law, unless authorised by the shareholders, a director cannot be a director in competing companies or those having the same business object, nor exercise the same trade or other competing trade, on his/her own account or on account of others, under the penalty of being dismissed and held liable for damages.

Last modified 8 Feb 2021

The Director is responsible for ensuring that the company complies with its statutory and legal obligations, inter alia, the Director shall sign accounting reports and submit them to the authorities, sign and submit applications to the Federal Tax Service to register changes in the company's information, maintain the company's list of participants, etc.

Last modified 8 Feb 2021

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders.  The accounts and other information must be filed with the ACRA within the prescribed time limits. The directors are also required to lay financial statements before the shareholders in the company’s annual general meeting

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

The South African Companies Act requires directors to prepare and file annual accounts and submit other information to the Companies and Intellectual Property Commission.  The accounts and other information must be submitted to the Companies and Intellectual Property Commission within the prescribed time limits.

A director, alternate director, prescribed officer and member of committee or board (collectively directors) must not:

  • Use his/her position or any information obtained while acting as a director to either gain an advantage for his/herself or for another person other than the company or knowingly cause harm to the company, by hindering the company’s commercial opportunities.
  • Exceed the company’s powers.
  • Make a secret profit.
  • Conclude a transaction or acquire an opportunity which was in fact a transaction or an opportunity that was available to the company, unless a full disclosure is made to and consent is obtained from the other directors.
  • Breach his/her duty of care, skill and diligence, by putting his/her interests above those of the company or by acting negligently. The test for determining negligence is an objective one, as it compares the conduct of the director to that of a reasonable director’s conduct.
  • If such director has or knows that a related person has a personal financial interest in a transaction or proposed transaction with the company, or in a matter to be considered by the board of directors at a board meeting, the director must not participate in the consideration of the matter, except to the extent of the disclosure or execute any document on behalf of the company in relation to the matter, unless specifically requested to do so.
  • Knowingly (an actual knowledge or where the director ought reasonably have known or have investigated further):
    • act in the name of the company, sign on behalf of the company or authorise action by or on behalf of the company without authority
    • act or fail to act with the intention to defraud a creditor, employee or shareholder of the company, or for any other fraudulent purpose.
  • Acquiesce in carrying out the company business despite knowing (or where he/she ought reasonably to have known and fails to investigate further) that such actions constitute reckless trading.
  • Be present at a relevant meeting or participate in the making of a decision by round robin and fail to vote against any of the following actions (to the extent the director knew the relevant action was inconsistent with the South African Companies Act or the company's memorandum of incorporation):
    • Issue of unauthorised shares or securities.
    • Grant of options over unauthorised shares.
    • Provision of unlawful financial assistance to any person for the acquisition of securities of the company.
    • Provision of unlawful financial assistance to a director, to the extent that the resolution or agreement has been declared void.
    • Approval of an unlawful distribution.
    • Unlawful acquisition by the company of any of its shares, or the shares of its holding company.
    • An unlawful allotment by the company, to the extent that the allotment or the acceptance of it is declared void.

Last modified 19 Apr 2021

Among other obligations laid out by the Spanish Companies Act, the directors must call the general shareholders’ meeting, draw up the annual accounts and file them with the Commercial Registry. They also shall, if necessary, apply for a declaration of insolvency.

Last modified 8 Feb 2021

The board of directors shall ensure that:

  • The annual report is prepared and be filed at the Swedish Companies Registration Office within the prescribed time limits.
  • A share register is maintained, stored and made available in accordance with the Swedish Companies Act.
  • A meeting of the board of directors be convened when requested by a board member or the managing director. The chairman of the board (if any) shall ensure that meetings are held when necessary. There are no statutory requirements for a certain number of board meetings. In practice, at least one inaugural board meeting is held in connection with the annual shareholders' meeting. However, the company's articles of association may contain requirements for the number of board meetings that must be held annually.
  • An annual shareholders' meeting be held within the prescribed time limits.
  • The company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

The CA requires directors to prepare, lay in a general meeting, and file annual accounts and submit other information to the Companies Registrar, including information about significant shareholders.  The accounts and other information must be submitted to the Companies Registrar within the prescribed time limits.

If these requirements are not complied with before the end of the period allowed for laying and delivering accounts and reports, every person who immediately before the end of that period was a director of the company, is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.

Further, if the directors of the company fail to make good the default within fourteen days after the service of a notice on them requiring compliance, the court may on the application of any member of creditor of the company or of the Companies Registrar, make an order directing the directors (or any of them) to make good the default within such time as may be specified in the order.  The court's order may also provide that all costs of and incidental to the application shall be borne by the directors.

It is a defence for a person charged with such offence to prove that he took all reasonable steps for securing that those requirements would be complied with before the end of that period. It is not a defence to prove that the documents in question were not in fact prepared as required.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 1 Mar 2021

Onshore UAE

Other obligations may include matters which are assigned to directors in the memorandum of association of an LLC and may vary according to how responsibility of managing the LLC is apportioned by the shareholders. This may include general company obligations such as maintaining records or calling annual general meetings.

Dubai International Financial Centre

The DIFC Companies Law requires directors to cause annual accounts to be prepared in relation to each financial year of the company.

Unless otherwise provided in the articles of association, the directors of a private company must also submit copies of the annual accounts to the shareholders together with an auditor's report, and file these with the DIFC within 30 days after circulation to the shareholders if:

  • annual turnover exceeds USD5,000,000 calculated on a consolidated basis including all subsidiaries; and
  • the company has more than 20 shareholders for the whole of that year.

The directors of a private company shall within 6 months after the end of the financial year, or earlier, appoint an auditor to hold office from such date until the end of the next period for appointing auditors.

Last modified 8 Feb 2021

The Act requires directors to prepare and file annual accounts and submit other information to the companies register, including information about significant shareholders.  The accounts and other information must be submitted to the companies register within the prescribed time limits.

Directors are also responsible for ensuring that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

Last modified 8 Feb 2021

The board generally oversees and manages the business and affairs of the company and must approve certain fundamental actions, such as appointing or removing the company’s executive officers, amending the company’s charter documents, approving the issuance of stock, or approving a sale of the company. Certain fundamental transactions may also require the approval of the company’s stockholders under the Delaware General Corporation Law or the company’s charter.  As part of its duty to remain informed, a board would ordinarily require management to present regular reports regarding the company’s financial position and results of operations.  In the event the company is in or nearing insolvency, directors may be personally liable for actions or inactions the company takes.  For example, if the company is unable to pay taxes to taxing authorities or wages to employees, the director may face personal liability.

Last modified 8 Feb 2021

Directors are generally responsible for ensuring that the company complies with its statutory obligations and all applicable laws, for example environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws etc.

Directors are also responsible for submission of financial statements to the tax and statistics authorities on a quarterly or annual basis, as applicable. Directors must notify the state register of any changes to the company’s address, information on the company’s ultimate beneficial owner and of other matters specified in Ukrainian legislation.

Last modified 8 Feb 2021

The Act requires that directors ensure that the company complies with its other statutory and legal obligations, for example under environmental and health and safety laws, employment laws, consumer protection laws, competition laws and bribery/anti-corruption laws.

The Act also requires that the directors ensure that the accounts and other information are kept up to date and are submitted within the prescribed time limits.

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