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Directors: Who are they? | |||||
作者:佚名 论文来源:本站原创 点击数: 更新时间:2008-12-11 | |||||
● 吕俊昭 By Loo Choon Chiaw
The recent formation of the Singapore Institute of Directors underlined the im-portant roles played by company di-rectors. It has further brought into focus the topic of Corporate Governance in general . The writer proposes to examine the legal issues of directors in a series of articles in this column commencing from this article. Unless otherwise specified, all references to statutory provisions are references to the Companies Act (Cap. 50) (hereafter referred to as ''the Act'').
The readers may be surprised to note that despite its importance, the term ''di-rector'' is not statutorily defined. Section 4 of the Act (hereafter referred to as ''Section 4'') merely states that a ''director'' includes any person occupying the position of director of a company by whatever name called (hereafter referred to as ''de facto director'') and includes a person (other than a professional adviser) in accordance with whose directions or instructions the directors of a company are accustomed to act (hereafter referred to as ''shadow director'') and an alternate or substitute director. Thus, pursuant to Section 4 and in the case of a de facto director and a shadow director res-pectively, a person may be a director though not designated as such. In con-trast, persons may be described as directors, for instance, Finance Director, Marketing Director or Human Resource Director, without their occupying the po-sition of directors within the meaning of Section 4.
The terms ''de facto director'' and ''shadow director'' are not statutory terms. The extension of the term ''director'' to cover both a ''de facto director'' and a ''shadow director'' aims to prevent those controlling the company from evading their statutory liabilities and obligations as directors by simply not accepting appointment as directors. In practice, it is not always easy to establish a person as a shadow director of a company, which involves the proof that the relevant board of directors has been failing to exercise any discretion or judgment, contending instead to act upon the directions and instructions of the alleged shadow di-rector as a matter of practice over a period of time.
In the present context, whilst both ''de facto directors'' and ''shadow directors'' are persons who have not been formally appointed to the relevant board of di-rectors, they are conceptually different and distinct. A de facto director is a per-son who assumes the functions of a di-rector. He is held out by the relevant company as its director, and personally claims and purports to act as such, although never formally appointed. In contrast, a shadow director does not claim or purport to act as a director. Indeed, he claims not to be a director. To borrow the language used in an English case, ''He lurks in the shadows, sheltering behind others who, he claims, as the only directors of the company to the exclusion of himself.'' The Articles of Association of a com-pany usually provide for the appointment of alternate or substitute directors. When duly appointed, an alternate or substitute director will, in the absence of the di-rector who appointed him, be entitled to perform all the functions of the latter. Functionally, directors may be cate-gorised either as an executive director or a non-executive director. Basically, exe-cutive directors are those directors con-cerned with the actual management of the company. Ordinarily, the Articles of Association of the company will confer upon them wide management powers. It is usual for executive directors to enter into service contracts with the company. Non-executive directors are commonly found in large companies, in particular, listed companies. Non-executive di-rectors invariably restrict themselves to purely advisory and supervisory roles. An ''independent director'' is a director who should be in a position to exercise in-dependent judgment in carrying out the functions of the Audit Committee of a listed company. We shall review in grea-ter detail the legal position of non-executive directors and independent di-rectors, and the important functions which they discharge, when the issues relating to an Audit Committee are examined. (The writer is the Senior Partner of Loo & Partners. He qualified as a Barrister-at-Law at Lincoln's Inn, London, and obtained his Master of Laws from London University. Mr Loo is also a fellow of the Chartered Institute of Arbitrators, London.) |
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