Transcript Team Building - Trinity Care and Support

Director’s Responsibilities
Who Are We?
 Set-up in 1982. Now the largest co-operative development agency in UK.
 Financially supported by:
 Welsh Assembly Government & European Union.
 Local Authorities .
 Develop and train co-operatives businesses throughout Wales:
 Community co-ops.
 Consortia/marketing co-ops.
 Credit Unions.
 Worker co-ops.
Our Services
Business Development & Training
Co-operatives
Community Co-operatives & Workers Cooperatives
Co-operative
Consortia
Bringing together existing businesses to
form a support co-op. Could include
farmers, food producers & retailers
Business survival through employee
ownership
Business
Succession
Learning Outcomes
By the end of this training day we will cover:
 The current role of the Director.
 The future role of the Director, based on the 2006
Companies Act.
 What to do when Directors disagree
What is the Role of the
Director
Working in pairs discuss what you think is
the role of the Director – Discuss for 10
minutes and then feedback.
What is the Company Director ?
Appointed by members/shareholders or Board to act
as agents of the company and manage its affairs
 Anyone can become a Director – subject to some
exceptions
 Age
 Capacity
 Legal
 Three types of Directors:
 Non-Executive Director
 Executive Director
 Shadow Director

The Roles of Directors
• They :– Regulate the affairs of the Company proceedings as they
see fit within the rules of the Company
– Manage the business of the company
– Call general meetings
– Appoint people or organisations to act on the company’s
behalf
– Delegate their powers to committees or managers
The Roles of Directors
• They may :– Appoint additional Directors to fill a casual/temporary
vacancy.
– Appoint a Director or Managing Director to any executive
position.
– Appoint or remove the Chairperson.
– Appoint or remove their Secretary.
– Distribute any surplus as laid out by their Memorandum
and Articles of Association.
Legal Duties – General Principles
•
A director is expected to show a level of care, diligence and
skill appropriate to their actual knowledge or expertise
• Level
of knowledge or expertise should be appropriate
for nature of business
•
They must be reasonably competent and comply with their
fiduciary duties
•
They must not allow the company to trade fraudulently, and
where the company is in financial difficulties they must not
trade wrongfully
Care, Diligence and Skill
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A Director is not necessarily an expert. Nor should
he/she be presumed to have skills they do not
possess, simply by virtue of their office.
A Director need not devote their continuous attention
to the business.
A Director need only display, in relation to their duties
“the reasonable care of an ordinary man or woman”
A Director is entitled to rely on other people, and
where appropriate, should be seen to rely on others.
A Director is not liable for errors of judgment.
Fiduciary Duties
Simply means that the Director will act in
“good faith”.
A series of specific duties are identified to
assist the Director in meeting this
requirement:
• Act in the best interests of the company as a whole
• Duty of Confidentiality
• Personal Interest
• Ultra Vires
Wrongful and Fraudulent Trading
Wrongful trading occurs when:
• The company is (obviously) insolvent (without planned
‘escape’ route) or in liquidation
• The Director/s knew or ought to have concluded that there
was no reasonable prospect of avoiding liquidation
– N.B. It is important to remember that wrongful trading will only apply when all
of the above points apply.
• Fraudulent trading occurs when:
The business of the company is carried on with the intent to
defraud creditors. Any person who is party to it, may be liable
to a fine or even imprisonment.
Companies Act 2006
For the first time a number of specific
Directors Duties are laid down within a
Companies Act
Many of these new Duties relate to areas
covered by Fiduciary Duties within
previous Acts
Directors Duties 2006
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Duty to act within powers 2007
Duty to promote the success of the company 2007
Duty to exercise independent judgment 2007
Duty to exercise reasonable care, skill and diligence
2007
• Duty to avoid conflicts of interest 2008
• Duty not to accept benefits from third parties 2008
• Duty to declare interest in proposed transaction or
arrangement 2008
Duty to promote the success of
the company
A director of a company must act in the way
he considers, in good faith, would
be most likely to promote the success of the
company for the benefit of its
members as a whole.
Duty to avoid conflicts of
interest
A director of a company must avoid a
situation in which he has, or can have, a
direct or indirect interest that conflicts, or
possibly may conflict, with the
interests of the company.
Duty not to accept benefits
from third parties
A director of a company must not accept a
benefit from a third party conferred
by reason of—
• (a) his being a director, or
• (b) his doing (or not doing) anything as
director.
Duty to declare interest in proposed
transaction or arrangement
If a director of a company is in any way,
directly or indirectly, interested in a
proposed transaction or arrangement with
the company, he must declare the
nature and extent of that interest to the
other directors.
Exercise
• Appoint Secretary and any other officers you
think you need
• Identify one person as a Director who has
discovered the following:
• The PAYE and NI haven’t been paid for three months
• None of the staff are accepting responsibility for ensuring the PAYE
and NI are paid
• No-one seems to have any idea what the company’s financial
position is
• The bank have rung to say that there is not enough money in the
company’s account to pay the current month’s wages
Exercise contd…
• As a Board agree the following:
• What are your immediate actions?
• What do you need to do over the next period?
[ Tip – this might include things that need to be written, information
gathered, people spoken to, decisions made ]
• What are the most important things that need to
be done to ensure you remain within the law?
Disagreement among Directors
Where a director believes a course of action
decided by the board is either potentially
damaging or improper, their duty to the
company extends beyond an adverse vote and
has three possible courses of action:
 Formal Objection
 Resignation
 Appeal to Members /shareholders
Breach of Duty
May lead to :

Loss of limited liability

Disqualification

Civil or criminal proceedings
Legal Structures & Director’s Responsibilities
Thank you!
Any Questions?