Each director is a key person. They are entrusted by the law to administer the company. Each one is responsible to ensure that the company complies with the law and is properly governed. Directors must be registered with CIPC. This is different to shareholders, who do not need to be registered. There are different types of directors.
The different types of directors
- Executive directors are salaried and run the company on a day-to-day basis.
- Non-executive (or outside) directors are not part of the executive management team. They are not an employee or affiliated in any way.
- Alternate directors act of behalf of a director when they cannot personally fulfil their duties.
- Temporary directors are appointed on a temporary basis or to fill a vacancy.
Other types of directors
A director can also include certain persons who are not members of the Board of the company. According to the Act, non-Board member directors can include:
- an alternate director
- a prescribed officers (irrespective of their title or function they perform)
- a member of a committee of the Board (regardless of whether or not the person is also a member of the Board)
- a related person
Who is a prescribed officer?
Regulation 38 describes a “prescribed officer” as someone who:
- exercises general executive control over the management of the whole, or a large part, of the business and activities of the company; or
- often participates to a material degree in the exercise of general effective control over, and management of the whole, or a large part, of the business and activities of the company
Steps you can to take
- Ensure the rights and obligations of directors are correctly stated in your MOI.
- Appoint a director correctly by asking Michalsons to draft an appointment of director letter.
