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.
There is no complete definition of the term "director" in Australian company law. Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director (whether they are called a director or not).
A director (or also managing director; in German Geschäftsführer) is the individual who manages the business of the GmbH. A director is responsible both for the business of the company as such as well as for all administrative duties, e.g. preparation of financial statements, filings with the companies register, tax filings, etc.).
Shareholders are free to decide whether a director shall be allowed to represent the company alone or together with another director (or more directors or together with a Prokurist; see What are the different types of director?).
A director is a (member of a) corporate organ of the company. As such, a director is basically regarded as someone who manages (either individually or together with others, depending on the company type and board structure) the affairs of the company on behalf of its shareholder(s).
The term director in Botswana is defined in the Companies Act (Cap 42:01) (the Act). According to the Act, a director is "a person occupying the position of director or alternate director of the company by whatever name called".
The term director can also be applied to the following persons in accordance with the Act:
- A person in accordance with whose direction or instruction the board of the company may be required or is accustomed to act.
- A person who exercises or who is entitled to exercise or who controls or who is entitled to control the exercise of powers which, apart from the constitution of the company, would fall to be exercised by the board.
A person cannot be appointed as a director of a company unless that person has consented in writing to be a director and has certified that he or she is not disqualified from being appointed or holding office as a director of a company.
A director is a person appointed by the shareholders in a shareholders´ meeting to be a member of the board of directors. Directors must accept their appointment, expressly or tacitly.
The board of directors is in charge of managing the company and represents it judicially and extra-judicially, to fulfil its purpose. The board is invested with all the managing and disposal authorities that are not otherwise established, by the law or the bylaws, as authorities of the shareholders’ meeting.
Directors’ functions are collectively exercised in duly constituted directors meetings. Therefore, individual acts of directors do not constitute an act of the board, nor of the company and they are not binding on the company unless the board, acting as such, has delegated some specific functions to the individual director.
There is no specific definition of the term "director" in Czech company law. Basically, the law defines a director by setting out the criteria for how directors can be appointed and what their duties are. It can therefore generally be said that a director describes someone who is a "statutory body" of a company, manages the affairs of a company on behalf of its shareholders as a director and is registered as such in the Commercial Register.
There is no codified definition as such of the term “director” in the Danish Companies Act. However, a director is a natural person who takes and implements decisions on behalf of the company.
The term “director” typically refers to a member of the board of directors in a company that has chosen a two-tier governance structure which is further described in Minimum/maximum number of directors. Thus, this guide also deals with the duties of a board of directors.
"Directors" usually refers to the members of the board of directors and, if appointed, the managing director (CEO). The managing director is optional unless otherwise stipulated in the articles of association.
French law only requires the appointment of a “President” (physical or legal person) who/which will represent the SAS towards third parties.
The President has the broadest powers to act on behalf of the SAS within the limits of the corporate purpose (subject, as the case may be, to internal limitations which may be provided for in the bylaws, but which are not enforceable against third parties).
French law however provides that the President may be assisted by one or several “General Managers” and/or “Delegated General Managers”, who/which may have the same powers than the President, depending on the bylaws of the SAS.
In addition, the bylaws of the SAS may freely provide for other governing bodies or individuals (such as a board of directors for example) to be appointed and how they should operate.
The President, any General Manager, any Delegated General Manager as well as any other manager to be appointed pursuant to the bylaws of the company may be referred to as “directors” or “managers” for the purposes of the liability regime applying to managers of an SAS.
For a GmbH, the correct term is “managing director” (Geschäftsführer). A managing director must be a natural person. A managing director manages the affairs of the company and represents it towards third parties.
The general rule is that in case of more than one managing director, the managing directors represent the company jointly. However, the articles of association may stipulate or allow that a managing director has sole power of representation or that, for example, two managing directors represent the company jointly or that one managing director does so jointly with a registered proxy holder (Prokurist).
The definition of a “director” under Hong Kong law is influenced by the common law jurisprudence. Basically, the law regards any person who manages the affairs of a company on behalf of its shareholders as a director (whether they are called a director or not).
Under Hungarian law in kfts. and zrts., the strategic management of the company is carried out by either one or more individual "executive officers” (vezető tisztségviselő), or by a body consisting of “executive officers” (board of directors). For the purpose of this guide we will use the term “director” for the executive officers.
The directors must be registered in the Hungarian companies register and such record must be kept up to date. Accordingly, the identity of the directors of any kfts an zrts is available to the public at any time.
There is no complete definition of the term "director" in Irish company law. Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director (whether they are called a director or not).
There is no complete definition of the term “director” in Italian company Law. The Italian Civil Code defines the functions carried out by directors, stating that directors are the company’s organ to which the managing of the company is exclusively entrusted. Directors carry out the activities which are necessary for the pursuing of the company’s purpose.
Basically, the law regards as a director someone who is responsible for the managing of the company affairs irrespectively of their formal qualification. It is not necessary for a director to be a shareholder.
There is no clear definition of a “director” in Japanese company law. In general, a director is someone who is appointed by the shareholders of a KK in general meeting and whose main roles are making decisions on the operations of the company and supervising the operations engaged in by other directors.
Section 2 of the Companies Act, 2015 (the Companies Act) defines a director as any person occupying the position of a director in a body corporate by whatever name called. It also includes any person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of the company are accustomed to act.
The scope of this definition is wide enough to include any person who has real governance of the affairs of a company.
There is no complete definition of the term “director” in Luxembourg company law. Basically, a “director” (referred to as “manager” for private limited liability companies) is in charge of the management of the affairs of a company on behalf of its shareholders (whether they are called a director or not).
The term “manager” will be used in this guide as this guide is focused on private limited liability companies.
Pursuant to Mozambican law, there is no legal definition of the term "director". However, the law determines that directors will be responsible for managing the affairs of a company on behalf of its shareholders/quotaholders, for representing and binding it, in accordance with the powers established under the relevant laws and the company’s articles of association.
Basically, the law regards as a director someone who is charged with the management of the company, subject to any restrictions under the articles of incorporation.
A director is any person appointed by the company to direct and manage the business of the company. A person who has not been formally appointed as a director will also regarded as a director under the law, if he/she is a person on whose directions and instructions the directors of the company are accustomed to act.
There is no complete definition of "director" under the Norwegian Private Liability Act. However, reference to a director is typically to a member of the company's board of directors, who is responsible for the organisation of a company and management of the company's affairs.
Further, the general manager of a private limited liability company may be referred to as the "managing director".
A director is an individual appointed by the shareholders' meeting to be part of the board of directors of the company, a collective body in charge of its management.
An appointed director must perform the position with the diligence of a prudent business person and a loyal representative. They are obliged to maintain confidentiality regarding the affairs of the company and the company information they have access to, even after the termination of their role.
There is no complete definition of the term "director" in Polish company law. Basically, the law regards the management board which represents the company and manages its affairs (the management board consists of members) as a body equivalent to the board of directors.
Pursuant to the Portuguese law, there is no legal definition of the term “director”. Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director.
Romanian law does not provide for an express definition of the term “director” (in Romanian administrator), but it addresses the eligibility criteria to be observed by the person to be appointed as director, as well as the duties, liabilities and, the organization /functioning requirements of the various board of directors/management structures. In a nutshell, the director manages the affairs of the company and represents the company towards third parties.
Russian legislation does not contain a definition of the term "director".
In general, an LLC has a sole executive body, which can be called a director, general director, CEO, president, etc (Director). The Director is generally responsible for the operational activity and day-to-day business of the company. The company's charter may provide for the formation of a board of directors (supervisory board) as the collegial management body (BoD) along with the Director.
In Russia the concept of the BoD or supervisory board is different from the common law countries (US, UK, Cyprus, etc). Under Russian law the BoD (the supervisory board) is not an executive body, but rather a supervisory body predominantly responsible for supervision and control over the business.
Section 4 of the Companies Act (Chapter 50) of Singapore (Act) provides that “director” includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors or the majority of the directors of a corporation are accustomed to act and an alternate or substitute director.
Broadly, the law therefore potentially regards someone who manages the affairs of a company on behalf of its shareholders as a director (whether they are called a director or not). Accordingly, it is the position that the individual holds and the role that the individual plays in managing the company that are important in determining whether he or she is a director of the company.
A director is a member of the board of a company, including an alternate director and any person occupying the position of a director by whatever name designated. The business and affairs of the company must be managed by (or under the direction of) the board.
South African company law also makes provision for "prescribed officers", which are persons who are not specifically appointed as directors but which exercise (or regularly participate to a material degree in the exercise) of general executive control over and management of all or a significant portion of the business or activities of a company. Prescribed officers are subject to the same fiduciary duties as directors.
At common law, persons who outwardly purport to act as a director, and which are tacitly permitted to do so by the company, will also be deemed to have the authority of a director to bind the company in certain instances.
Company directors are natural persons or legal entities (in the latter case represented by a natural person) who are in charge of managing and representing the company. They are responsible for making business decisions and overseeing the affairs of a company.
There is no complete definition of the term "director" under Swedish company law. However, a director is a member of a company's board of directors who is responsible for the organisation of a company and management of the company's affairs.
There is no complete definition of the term "director" in Tanzania company law. A director is someone elected or appointed to manage a company's business and affairs in accordance with the Companies Act Cap 212 (the CA).
Directors may include employees, some of whom are officers in management positions in the company.
There is no complete definition of the term "director" in UAE company law. The law essentially regards someone who manages the affairs of a company on behalf of its shareholders as a director. In most cases, the terms "director" and "manager" are used interchangeably.
Dubai International Financial Centre
The DIFC Companies Law does not provide a complete definition of the term "director". However, a director is considered to be someone who manages the affairs of a company on behalf of its shareholders (whether they are called a director or not). If a person acts in this way they should be formally registered with the DIFC as a director.
There is no complete definition of the term "director" in UK company law. Basically, the law regards someone who manages the affairs of a company on behalf of its shareholders as a director (whether they are called a director or not).
The oversight of a corporation is undertaken by its board of directors. A director is a member of the board of directors, which manages or directs the management of the business and affairs of the corporation, unless otherwise provided in the company’s charter documents. A director (also called a “board member”) is distinct from the company’s stockholders, or owners, and distinct from the company’s executive officers or management. A stockholder, executive officer or other member of management can serve as a director if elected by the stockholders.
The Law of Ukraine "On Limited and Additional Liability Companies" (LLC Law) operates with the notion of the "executive body". Such executive body is responsible for managing the company’s day-to-day activity, except for those within the exclusive competence of the general meeting and the supervisory board (if established). The executive body can be composed either of one person and then it is called a "director" or can be collegiate, in which case it is named as the "board of directors" or otherwise.
There is no complete definition of the term "director" in Zimbabwean company law. However, the definition of a “director’’ in terms of the Companies and Other Business Entities Act (the COBE or the Act) includes:
- Any person occupying the position of director.
- An alternate director as defined in the COBE.
- A person who is a member of a committee of a board of a company, or of the audit committee of a company, irrespective of whether or not the person is also a member of the company’s board.
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.
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.
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.
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.
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.
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.
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.
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).
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?
- 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.