As a director of a company in South Africa you take on a number of obligations and legal responsibilities which if not upheld can lead to personal liability and prosecution.
The affairs of a company are managed by, or under, the direction of its board of directors. The board has full authority over the company except to the extent that the Act or Company's Memorandum of Incorporation (MOI) provide otherwise.
Directors have a fiduciary duty to act with care, skill and diligence in the best interests of the company at all times. This includes the following:
Disclosing conflict of interests, using position and information for company's benefit, disclosure of material information, performing duties in good faith.
Strategy and Corporate Structure
Duty to manage the business affairs of the company, carry on business without trading recklessly or under insolvent conditions; duty to comply with Solvency and Liquidity test; and comply with the Act and Memorandum of Incorporation (MOI).
Board Structure and Corporate Administration
Appointing board committees, as well as calling and convening directors' and shareholders' meetings.
Accountability and Assurance
Maintaining company and accounting records, appoint Auditors or Independent Reviewers where applicable, and obtain an Independent Review of the financial statements.
Directors get remunerated in terms of the stipulations in the MOI which are required to get approved by the shareholders by special resolution.
Disclosure and Transparency
Required to prepare annual financial statements, directors' report, disclose directors' remuneration in the financial statements and file an annual return with the company registrar.
Ensure that shareholders can exercise their voting power and rights by facilitating shareholders' meetings and operating within the framework of the MOI.
Companies are required to prepare annual financial statements within 6 months of year end, with the annual income tax returns being due by the latest 12 months after year end.
The responsibilities of a director are onerous and can lead to prosecution in certain cases if directors are found to be in breach of their fiduciary duties.
Make sure you have the right resources in place. Seeking advise from qualified attorneys and accountants can be invaluable when it comes to decision making and maintaining your fiduciary responsibilities.
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