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    Company Quick Quiz

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    Morgan Phrasaddha Naidu Puspakaran
    There are several types of company directors: 1. Executive directors work full-time for the company and have significant responsibilities. 2. Non-executive directors do not work full-time but provide oversight and challenge executive decisions. 3. Independent directors have no direct relationships with the company and provide expert external advice to the board. The case of Smithton Ltd v Naggar established factors for determining a de facto director including whether the individual assumed the status and functions of a director, even without a formal title. Job titles are not decisive, and both objective and contextual factors must be considered.

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    Company Quick Quiz

    Uploaded by

    Morgan Phrasaddha Naidu Puspakaran
    18 views3 pages
    There are several types of company directors: 1. Executive directors work full-time for the company and have significant responsibilities. 2. Non-executive directors do not work full-time but provide oversight and challenge executive decisions. 3. Independent directors have no direct relationships with the company and provide expert external advice to the board. The case of Smithton Ltd v Naggar established factors for determining a de facto director including whether the individual assumed the status and functions of a director, even without a formal title. Job titles are not decisive, and both objective and contextual factors must be considered.

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    COMPANY QUICK QUIZ

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    There are several types of company directors: 1. Executive directors work full-time for the company and have significant responsibilities. 2. Non-executive directors do not work full-time but provide oversight and challenge executive decisions. 3. Independent directors have no direct relationships with the company and provide expert external advice to the board. The case of Smithton Ltd v Naggar established factors for determining a de facto director including whether the individual assumed the status and functions of a director, even without a formal title. Job titles are not decisive, and both objective and contextual factors must be considered.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views3 pages

    Company Quick Quiz

    Uploaded by

    Morgan Phrasaddha Naidu Puspakaran
    There are several types of company directors: 1. Executive directors work full-time for the company and have significant responsibilities. 2. Non-executive directors do not work full-time but provide oversight and challenge executive decisions. 3. Independent directors have no direct relationships with the company and provide expert external advice to the board. The case of Smithton Ltd v Naggar established factors for determining a de facto director including whether the individual assumed the status and functions of a director, even without a formal title. Job titles are not decisive, and both objective and contextual factors must be considered.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 3

    NUR AFFIERA ALIA ASMA BINTI AHMAD SABRI

    254317

    Briefly explain as to these types of directors:

    Cite a decided case for situation 3.

    1. Executive
    Executive director is the full time working director of the company. They have a higher
    responsibility towards the organization. The company and its employees expect them to
    be efficient and careful in all dealings.

    2. Non-executive
    Non-executive is a non- working director and they do not involve in the everyday
    working of the company. They might take part in the planning or policy-making process.
    They challenge the executive directors to come up with decisions and solutions that are in
    the best interest of the company.

    3. Independent

    They are the ones who do not have any direct relationship with the company. Their
    experience is their asset and gives expert advice to the board when required.

    Qualifications to be an independent director:

     Must have expertise and experience


     Must be a person of integrity
     Should not be a promoter of the company or its subsidiaries
     Should have no relations (financial/personal) with the promoters, or directors of
    the company
     Should not have been key managerial personnel of the company or any of its
    holdings and subsidies
     Should not hold total voting power exceeding two percent in such company
    NUR AFFIERA ALIA ASMA BINTI AHMAD SABRI
    254317

    4. Non-independent
    Non-independent directors are also known as non-executive directors are the custodians
    of the governance process. They are not involved in the day-to-day running of business
    but monitor the executive activity and contribute to the development of strategy.

    5. De jure / De facto
    A de-facto director or director in fact is someone who acts as a director but who has not
    been formally appointed. Meanwhile a person who has been formally appointed is known
    as ‘de jure’ director or director in law. They are elected as a director in accordance with
    the articles of association of the firm, and gives written consent to hold the office of a
    director. They enjoy full rights and privileges of a director, and is held individually and
    collectively liable for the acts and/or negligence of the firm.

    Case of Smithton Ltd v Naggar and others [2014]

    It was held that one of the key factors in determining whether someone was a de facto
    director was whether that person was part of the corporate governance system of the
    company and whether he assumed the status and function of a director so as to make
    himself responsible as if he were a director. The judge also gave further guidance on the
    matter, namely:

     That a job title will not be a deciding factor - the court will also look at what the
    director actually did.
     It is not a defence to show that the director, in good faith, thought he was not
    acting as a director. This question will be determined objectively. 
     Any acts done by the director should be looked at in the relevant context. 
     A relevant factor will be whether the company considered the individual to be a
    director and held them out as such, and whether third parties considered the
    individual to be a director.
    NUR AFFIERA ALIA ASMA BINTI AHMAD SABRI
    254317

     The fact that a person is consulted about directorial decisions, or their approval is
    sought on such decisions, does not in general make them a director because they
    are not making the decision.

    6. Nominee Director
    Shareholders, central government or third parties appoint the nominee director. Nominee
    directors come on board when there is grave mismanagement or the board members
    abuse their powers.

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