Duties and obligations of directors

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

All directors are subject to general law and statutory duties relating to conflicts, misuse of position and misuse of information.  In addition, a director of a public company (and the related parties of such a director) may not be given a financial benefit by the company (or a controlled entity) without prior shareholder approval, unless one of the statutory exceptions applies.

Last modified 8 Feb 2021

Transactions between the company and a director usually do not require the consent of shareholders if such transactions are at arms' length (except in the first years after incorporation), unless a director is discharged from an obligation or is granted a special advantage (in which case the director – if he is also a shareholder – has no voting right).

Last modified 8 Feb 2021

In the event that a director has a direct or indirect interest of a financial nature which is opposed to the interest of the company with respect to a matter or a transaction upon which the management organ has to decide, the director must give prior notice of the conflict to the other directors.

The declaration of the director as well as any justifications of the decisions taken have to be recorded in the minutes of the meeting of the other directors. The conflicted director may not take part in the deliberations (in case of a collegiate management body), nor vote, with respect to the conflicted decision or transaction.

When all directors have a conflict of interest, the decision or transaction is escalated to the general shareholders’ meeting.

In the event of failure to observe these rules: the company may claim the directors’ resolution is null; the director who neglected to inform the other directors of his conflict of interest could be found liable for the damages the company incurred; and other directors may be held jointly and severally liable, in the event they could have reasonably been aware of the conflict of interests or it was known to them and they did not ensure compliance with such rules.

Even if the conflict of interest procedure has been observed, the directors may still be held personally and jointly liable for damages suffered by the company or by third parties, if the operation or resolution approved by the directors results in an unjustified benefit for a director, to the detriment of the company.

Last modified 8 Feb 2021

A director of a company shall, forthwith after becoming aware of the fact that he or she is interested in a transaction or proposed transaction with the company, cause to be entered into the interest register and in the event that the company has more than one director, disclose to the board of the company the full nature of the interest.

A transaction entered into by the company in which a director of the company is interested may be avoided by the company at any time before the expiration of six months after the transaction is disclosed to all the shareholders.

The general rule is that a company is prohibited from making a loan to a director of it, or from entering into any guarantee or providing any security in connection with a loan made by any person to such director.

However, the Companies Act makes the following exceptions:

  • A private company may make a loan or give a guarantee or security in respect of a loan to a director of it or its holding company provided the transaction has the unanimous assent of all its members.
  • A company is not prohibited from providing funds to a director to meet expending incurred or to be incurred by him for the purpose of the company or for the purpose to perform his duties as an office of the company.
  • The company may make a loan to director who is engaged in the salaried employment of the company in accordance with any employee loans scheme approved by the general meeting of the company.
  • A company may make a loan or give a guarantee or security in connection with a loan made by any person to a related company.
  • The company may also make a loan to a director who holds salaried employment in the company or in a holding company or subsidiary of the company.
  • A money lending company may advance funds to a director provided this is done in the ordinary course of business.

Last modified 1 Mar 2021

The Corporations Act sets out special rules for transactions between the company and its directors.

Closed Corporations

If a director has interest, directly or as third-party representative, in acts or contracts involving a "significant amount" of money, those acts or contracts may only be executed, when they are:

  • Known and previously approved by the board of directors. The director with the interest must abstain from participating in this decision.
  • Adjusted to equity conditions similar to those that usually prevail in the market.

The bylaws may authorise relevant acts or contracts so that they are not subject to these conditions.

These rules will be not applicable if the act or contract has been approved or ratified by an extraordinary shareholders meeting which has a quorum of two thirds of the shareholders with voting rights.

The Corporations Act assumes the director has an interest in any negotiation, act, contract or operation, where the following persons intervene in it:

  • The director, their spouse or certain relatives.
  • The companies in which the director is a director or owns, directly or indirectly, 10% or more of the capital.
  • The companies in which any of the director's relatives specified above, are directors or own, directly or indirectly, 10% or more of the capital.
  • The company's controller or any of their related persons, if the director would not have been appointed without the votes of the shares owned by the controller or their related persons.

As stated by the Corporations Act, a “significant amount” means any act or contract that exceeds 1% of the corporation's capital, provided that this act or contract exceeds the equivalent of 2,000 Unidades de Fomento (approx. USD83,000); or in any case, when it exceeds 20,000 Unidades de Fomento (approx. USD830,000).

All separate acts, contracts and operations that are executed in a period of 12 consecutive months by means of one or more similar or complementary acts, in which there is identity of parties( including related parties) or object, are presumed to constitute one single act, operation or contract.

In addition, minutes of the relevant board meeting must mention the deliberations for approving the terms and conditions of the relevant act or contract. Shareholders shall be informed of these acts or contracts in the next shareholders' meeting.

If these rules are breached, the validity of the act, contract or operation will not be affected. However, relevant sanctions may be applied and the company, the shareholders and the interested third parties, will be allowed to claim damages caused.

Listed Corporations

Special rules and provisions apply to related party transactions in listed corporations and their affiliates.

Finally, the Corporations Act exempts some related parties operations from the requirements and procedures established for them in the law.

Last modified 5 Apr 2021

Without the consent of all shareholders, a director may not:

  • Conduct their own business in the company’s sphere of activity or business, including in favour of third parties, or act as an intermediary of the company’s business transactions for third parties.
  • Be a member of the statutory body of another legal entity engaged in a similar sphere of activity or business, or a person in an equivalent position, unless such entity is within the same group as the company.
  • Participate in the business carried out by another business corporation as a member with unlimited liability or as the controlling person of another entity engaged in the same or similar sphere of activity or business.

Last modified 8 Feb 2021

The Danish Companies Act provides that a company may solely grant loans or make assets available to directors and/or their connected persons provided that certain requirements in the Act are met, unless the granted loans etc. are deemed to be in the course of a usual business transaction.

A member of the board of directors cannot participate in the decision-making process of a transaction involving an agreement either between the company and that member or between the company and a third party, if that member has a material interest in such business that may conflict with the interests of the company.

Last modified 8 Feb 2021

General rules (including disqualification) regarding decision making are applicable to transactions with the directors. Certain loans and collaterals to, and certain transactions with, related parties of the company need to reported in the annual report.

Last modified 8 Feb 2021

French law provides that certain agreements concluded directly or through a third party between the company and one of its directors (referred to as related party transactions) must be subject to the approval of the shareholders of the company after their conclusion, upon review of a specific report from the company’s statutory auditors.

Refusal of approval by the shareholders has no consequences for the validity of the agreement:  however, the director concerned and if applicable, the shareholders having entered into the agreement may be held liable for any prejudicial consequence that the agreement may have for the company.

In addition, the bylaws may provide for additional constraints relating to the control procedure.

Certain other agreements, directly or indirectly entered into between an SAS and one of its directors are, under penalty of nullity of the relevant agreement, forbidden:

  • To borrow in any form whatsoever from the company.
  • To be granted an overdraft by the company, in a current account or otherwise.
  • To have the company guarantee or endorse their commitments to third parties.

The same prohibition applies to the spouses, ascendants or descendants of directors and to any intermediary. However, the prohibition does not apply when the director is a legal entity.

Last modified 8 Feb 2021

There are no general restrictions except that any such transactions must be at arms’ lengths in order to avoid any breach of capital maintenance rules or tax implications. However, a managing director cannot participate in any decision relating to their own discharge or which would give rise to a conflict of interest such as the release of such managing director from a liability.

Last modified 8 Feb 2021

The Companies Ordinance (CO) prohibits a private company from making a loan or quasi-loan (if the private company is a subsidiary of a public company) to, or entering into credit transaction as a creditor (if the private company is a subsidiary of a public company) for an entity connected with a director without prescribed approval of disinterested members. The CO also requires members’ approval for directors’ long-term employment (i.e. a term of employment that exceeds or may exceed three years).

Last modified 8 Feb 2021

In the case of kfts (limited liability companies), approval of entering into a contract between the company and a director (or his relatives) falls within the exclusive competence of the general meeting.

There is no corresponding mandatory rule for zrts (companies limited by shares) by default. However, the articles of association often contain such requirement or if the decision belongs to the board, the affected board members are usually disenfranchised (by the board rules) when voting on the approval of such contracts.

Last modified 8 Feb 2021

The Act regulates the circumstances in which directors and their connected persons (broadly, family members and connected companies or trusts) can enter into transactions with the company.  The transactions covered by these rules include long term service contracts, loans, guarantees and the disposal or acquisition of substantial assets.  Unless any exemptions apply, these transactions may only be entered into with prior shareholder approval.

Last modified 8 Feb 2021

The main restrictions on directors’ transactions with the company concern the operations that can give rise to conflicts of interest (i.e. the circumstances in which an interest of directors and/or their connected persons (broadly, family members and connected companies or trusts) is in conflict with that of the company), which require directors to comply with the aforementioned disclosure requirement. If such a conflict occurs, the transactions carried out may only be entered into with prior shareholder approval.

Last modified 8 Feb 2021

If a director is to engage in transactions with the company (e.g. the director sells his/her own property to the company), the director needs to obtain the approval of the board of directors (or, if the company does not have a board of directors, the approval of the shareholders in a shareholders' meeting). The director must disclose all relevant facts to the board of directors (or, if relevant, shareholders) prior to their voting on the matter. The director who is to engage in the transaction is considered as having a "special interest" and he/she may not participate in decision-making or make a vote on the transaction at the board of directors' meeting. After the transaction is completed, the director must make specified disclosures to the board of directors (if there is one).

Last modified 8 Feb 2021

Certain transactions such as acquisition of substantial non-cash assets by directors require shareholder approval. Exceptions to this include transactions on a recognised investment exchange and in the case of a company in liquidation or under administration unless the liquidation is a member voluntary liquidation.

Loans, guarantees and security provided by a company to its director also require a resolution of shareholders and where the director is a director of the company's holding company, the transaction also needs to have been approved by a resolution of the members of the holding company.

Further, directors are required to declare their interest in any transaction in which they have an interest contemplated by the company.

Last modified 16 Jun 2021

A manager who has an interest in a transaction carried out other than in the ordinary course of business which conflicts with the interests of the company must advise the board of managers accordingly and have the statement recorded in the minutes of the meeting and the manager concerned may not take part in the deliberations concerning that transaction.

A special report on the relevant transaction must be submitted to the shareholders at the next general meeting of the shareholders, before any vote on any other resolution.

Where, by reason of a conflicting interest, the number of managers required to validly deliberate is not met, the board of managers may decide to submit this specific item to the general meeting of shareholders.

Last modified 8 Feb 2021

The Commercial Code establishes for share companies that contracts entered into between the company and its directors, directly or through an intermediary, are null and void unless they have been previously authorised by a decision of the board of directors in which the interested director cannot vote, and with the favorable opinion of the supervisory board or the single supervisor. This also applies to acts or contracts entered into with companies that are controlled by, or form a group with, the contracting director.

An exception applies when the contract in question is part of the business of the company and no particular advantage results from or has been granted to the contracting director.

Note also that the directors may not, without prior explicit consent from the shareholders, perform on their own account or on behalf of others, a commercial activity competing with an activity covered by the company’s purpose. In accordance with the Mozambican Commercial Code, the directors are forbidden from, amongst other things, the following acts:

  • Entering into agreements with the company or obtaining guarantees from the company for their obligations.
  • Receiving from third parties any personal advantages, due to the exercise of their position.
  • Gaining advantages, personally or for third parties, by failing to take advantage of a business opportunity in the company's interest.
  • Performing acts of generosity at the expense of the company, unless authorized by the general assembly within the limits established by the law.
  • Taking or using loan or credit, resources or goods belonging to the company, for personal gain or that of third parties, without prior consent from the general assembly.

A director cannot vote on matters in which he/she has, on his/her own behalf or on behalf of a third party, a conflict of interest with the company.

Last modified 19 Aug 2021

In principle, the power of representation accrues to each director individually and is unrestricted and unconditional. The articles of association may deviate from this, for example by stipulating that directors must sign jointly. Such restriction applies to all matters and not to certain matters only. This restriction must have been registered with the Chamber of Commerce in order to invoke it against third parties.

In the event of a breach of the power of representation arising from the law or the articles of association, the company shall in general not be bound by the contract.

Last modified 8 Feb 2021

Directors must not put themselves in a position where there could be a conflict between their personal interests and their duty to the company. A director who is directly or indirectly, interested in a transaction or a proposed transaction with the company, must immediately notify the directors of such company in writing, specifying nature of his interest.

Generally, Nigerian company law regulates the circumstances under which directors or persons connected to them can enter into transactions with the company, e.g. the disposal or acquisition of substantial company property.  Unless exemptions apply, these transactions may only be entered into with prior shareholder approval.

Last modified 1 Mar 2021

There are certain restrictions concerning a board member’s and a general manager’s ability to transact with the company.

A board member cannot participate in the discussion or decision of any matter which is of such particular importance to himself or any related party that he must be deemed to have a special and prominent personal or financial interest in the matter.

Nor may a member of the board of directors or general manager participate in any decision to grant a loan or other credit to themselves or to issue security for his own debt.

Last modified 16 Jun 2021

Directors can only enter into agreements with companies which deal with those operations normally carried out between the company and third parties according to market conditions. The company can only grant loans to directors or grant guarantees on its behalf on similar terms and conditions to such transactions usually executed with third parties.

If the agreements, loans or guarantees do not meet these requirements, the prior approval of the board with the vote of at least two-thirds of its members is required.

The directors are jointly and severally liable to the company and third parties’ creditors for any agreements, loans or guarantees entered into or granted in violation of the above-mentioned provisions.

Last modified 26 Jul 2021

The Polish Commercial Companies Code regulates the way in which management board members may enter into transactions with the company. Firstly, the execution by a company of a loan agreement, credit agreement, guarantee agreement or a similar agreement with a member of the management board or for the benefit of such member requires consent of the shareholders' meeting. Secondly, in a contract between the company and a management board member, as well as in a dispute with such a member, the company must be represented by the supervisory board (if established at a given company) or an attorney appointed by a resolution of the shareholders' meeting.

Last modified 8 Feb 2021

Pursuant to the Portuguese Companies Code, any contracts entered into between the company and its directors, directly or through an intermediary, are null and void, if prior authorisation was not given through a resolution approved by the board of directors, in which the party in question cannot vote, and with the consent of the supervisory board. The annual report of the board of directors must specify any such authorisations that were granted and the report from the supervisory board must refer to the statements of opinion drawn up in connection with these authorisations.

Please note that the company is prohibited from granting loans or credit to directors, making payments on their behalf, providing guarantees for obligations assumed by them and granting them salary advances of more than one month.

Last modified 8 Feb 2021

Unless the AoA of the company provide otherwise, the director is only allowed on his/her own account, to dispose of,  or acquire, assets to or from the company, having a value of more than 10% of the value of the company's net assets, with the prior approval of the GMS, under the sanction of nullity.

The Company Law does not contain similar provisions for the case of  LLCs. However, it may be construed that the same limitation  applies by analogy.

The considerations provided above in relation to the conflict of interests should also be taken into account.

Last modified 8 Feb 2021

Transactions connected with the Director, BoD members, their relatives or controlled persons may be subject to approval. Approval may be requested by at least 1% of the company's participants, the Director or BoD members.

In the absence of such approval, at least 1% of the company's participants, the Director or BoD members have the right to claim a disclosure of information on the interested-party transaction or challenge the interested-party transaction if such transaction is concluded to the detriment of the company's interest.

Last modified 8 Feb 2021

Every director or a chief executive officer of a company who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company shall as soon as is practicable after the relevant facts have come to his knowledge shall declare the nature and extent of his / her interest in the proposed transactions at a meeting of directors or by written notice to the company. Save as otherwise provided for in the constitution, the director shall be entitled to vote in the proposed transaction and enter into the proposed transaction.

Nonetheless, a director should also be reminded of his / her common law fiduciary duty to the company and must not place himself / herself in which there is a conflict between his duties to the company and his / her personal interests or his / her interests to others.

Last modified 8 Feb 2021

A director or a person related to that director may transact with the company subject to full disclosure of their interests, however that director may not participate in the board's consideration of such transaction and may not vote in respect thereof if they or a related person have a personal financial interest in the matter.

If a 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:

  • Disclose the interest and its general nature before the matter is considered.
  • Disclose any material information relating to the matter, and known to the director.
  • If present at the meeting, leave the meeting immediately after making any disclosure.
  • Communicate to the board at the earliest practicable opportunity, any information which comes to the director’s attention which is of importance to the company, unless the director:
    • reasonably believes that the information is immaterial to the company, generally available to the public or known by the other directors, or
    • is bound by legal or ethical obligation of confidentiality.

Last modified 19 Apr 2021

With the exception of usual transactions, in standard conditions and with low relevance, directors and their connected persons or companies shall not enter into transactions with the company unless an specific exemption is granted by the general shareholders meeting.

Last modified 8 Feb 2021

There are certain restrictions on a board member's (and such board members' affiliates) ability to transact with the company, including conflicts of interest and loans from the company.

Conflicts of interest

A board member of a Swedish limited liability company may not participate in a matter regarding an agreement between the company and the board member (or an entity controlled by the board member) or if there is a risk for conflict of interest. In practice, this also covers litigation or other legal actions between the board member (or entity controlled by the board member) and the company.

Loans from the company

A Swedish limited liability company may not lend money to any board member of the company or a board member of another company within the same group. Certain affiliates of the board member are also included in this restriction, as well as legal entities controlled by the board member.

Last modified 8 Feb 2021

The CA and the constitutional documents regulates the circumstances in which directors and their connected persons (broadly, family members and connected companies or trusts) can enter into transactions with the company.  The transactions covered by these guidelines include long term service contracts, loans and the disposal or acquisition of substantial assets.  Unless any expenses  exemptions are stipulated, these transactions may only be entered into with prior shareholder approval.

Last modified 1 Mar 2021

Onshore UAE

A director should be expressly authorised in an LLCs memorandum of association or by way of a power of attorney in order to transact in the name of an LLC. In most cases, such authority is scrutinised in the UAE depending on the nature of the transaction and holding the position of director is not always sufficient in and of itself to permit a director to bind an LLC.

Dubai International Financial Centre

The DIFC Companies Law indicates that the validity of an act by a company shall not be called into question on the ground of lack of capacity by reason of anything in its articles of association or by any act of its shareholders. Without limitation to the generality of this position, a person acting in good faith when dealing with the company is not affected by any limitations in its articles of association relating to its directors’ powers to bind the company, or authorise another to bind the company.

With respect to director's transactions with the company, as above, directors must disclose the nature and extent of their personal interests in a proposed transaction or arrangement with the company before it is entered into. Directors must also declare the nature and extent of their interest in a transaction or arrangement that has already been entered into by the company as soon as reasonably practicable.

Last modified 8 Feb 2021

The Act regulates the circumstances in which directors and their connected persons (broadly, family members and connected companies or trusts) can enter into transactions with the company.  The transactions covered by these rules include long term service contracts, loans and the disposal or acquisition of substantial assets. Unless any exemptions apply, these transactions may only be entered into with prior shareholder approval.

Last modified 8 Feb 2021

The duty of loyalty requires directors to act in the best interests of the corporation and its stockholders, and not to engage in conflicted or self-interested transactions that are not in the corporation and its stockholders’ best interest. A board considering a transaction where one or more directors has a conflict of interest can implement procedural safeguards to guard against claims of a breach of duty of loyalty.  For example, the director may disclose all material facts relating to a conflict of interest and recuse himself/herself from the deliberations and decisions regarding the matter, the board may form an committee of directors without conflicts to negotiate and enter into the transaction, and/or the transaction may be made subject to the informed, uncoerced vote of the unconflicted stockholders.

Last modified 8 Feb 2021

Transactions entered into between:

  • the company’s director(s) and the company
  • two companies in which one and the same person holds management positions
  • other transactions defined by the company’s charter

are considered as interested party transactions. The company’s charter may specify a special approval procedure for such interested party transactions.

Last modified 8 Feb 2021

A director is not permitted to receive financial assistance from the company unless it is done in pursuant of paying them what is owed to them, or the business is one that lends money, or the loan is to help the director buy shares in the company.

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