The directors of a company are the key people entrusted by law with the function of administering the company and are central to ensuring good corporate governance in the company.
Different types of directors: Executive and non-executive and alternate directors. All carry the equal responsibility to ensure that the company complies with the law and is properly governed.
Executive directors are salaried and involved with the day to day running of the company, and alternate directors are appointed to act on behalf of a director when he or she cannot personally fulfill his or her duties.
Many executive directors enter into a fixed term service agreement with the company, which further regulates their relationship with the company. The King III report recommends that the term of these contracts should not exceed 3 years.
The Board refers to the collective word used to designate directors when they act together as a group.
The director functions as both a trustee and a consultant i.e. he or she is required to have the experience, skill, time and ability necessary to carry out his or her functions effectively, and should place the interest of the company first.
At common law, directors owe fiduciary duties and obligations of care and skill to the company, which are similar to that of a trustee.
The directors are not personally liable for the debts of the company.
Under certain circumstances, however, the corporate identity of the company is disregarded e.g. where business is conducted recklessly or with intent to defraud, and the persons responsible (usually a director) may become personally liable for the debts of the company.