Directors Role

Written on 07/09/2023
Nexia SAB&T

In terms of the Companies Act, the business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company.

Directors are ultimately responsible for acts committed in the name of the company even though the routine running of the company is often delegated to management.

Directors do not need to be South African residents or nationals. The Act requires that the register of directors reflects each directors’ nationality and passport number if they are not South African. There are no restrictions on foreign managers.

The role of a director is a challenging one, accompanied by onerous duties and responsibilities. With improving standards of corporate governance, directors are required to be more and more accountable, transparent and responsive to stakeholders and to society. Directors and officers are required to be cognisant of corporate legislation pertaining to their office, and have a duty to ensure that the company complies with all other applicable laws, industry or sector specific legislation. Directors are required to ensure that managers and employees are aware of the legislation, and that all within the company are committed to act honestly, with integrity, and with a high level of competence and knowledge. Adherence to non-binding rules, codes and standards of good corporate governance are considered to be key to the effective management and control of a company. The King IV ™ Report and Code of Corporate Governance is a guideline for best practice and provides the main standard for corporate governance in SA.

The King Report distinguishes between two types of directors:

  • Executive director: a full time salaried employee and under a contract of service with the company who is involved in the daily running of the business.
  • Non-executive director: a part time director who is not an employee of the company and is not involved in the day to day running of the business. A non-executive director is independent from management and can therefore offer objective judgement.

Should require professional advice in this regard do not hesitate to contact our offices.

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