Is your company director compliant with the Companies Act?
In terms of the Companies Act, there are a number of duties company directors must follow. Failure to adhere to these duties means your company director could get fined up to R1 million or thrown in jail for up to ten years. Read on to discover four director duties your company director must obey to avoid a jail term.
A director is a 'member of the board of a company or an alternate director of a company and includes any person occupying the position of director or alternate director, by whatever name designated,' the Practical Accountancy Loose Leaf explains.
Your company director could be face up to a R1 million fine or ten years in jail if he doesn't adhere to legally prescribed director duties.
But your company can avoid this by ensuring your company director is compliant with the Companies Act.
Four duties directors need to adhere to or face ten years in jail
A director must act in the best interest of the company. He must distinguish between personal interests and business interests.
A director must act in good faith and for proper purpose. Your director mustn't 'cheat your company, enter into a transaction with a hidden agenda,' says the Loose Leaf. It's important that he acts in the company's best interests.
A director must display independent judgement in decision-making. A company appoints a director because he has a skill set he can use to benefit the company. So it's important that other people don't influence his decisions or dictate how he should act or vote.
Directors must not use information they get from the company for their own personal benefit.
Ensuring that your company director is compliant with these duties will help him avoid a hefty fine and a possible jail term.