Before you become a director (of any kind) of a company, you must know that there are certain risks you would be assuming. The risks are many and beyond the purpose of this blog, but I have summarised and listed many important ones below.
1. A director risks liability for a company’s criminal acts. A company may be tried and convicted for criminal acts such as stealing, fraud, corruption, forgery, and possibly even murder. Because a company is not human and can only be fined but not jailed, officers of the company such as directors may be made to bite that bullet. This liability stretches to the offence of “contempt of court”.
2. Directors stand in a position of utmost trust with the company. They are ‘sworn’ to act always in the best interest of the company. Where a director acts adversely to this duty, they may be sued by the company or, in certain circumstances, by the shareholders of the company.
3. Directors of a company may find themselves unable to work in certain institutions if the company goes insolvent, such as banks. This would limit employment opportunities.
4. Directors of companies have to declare their interests in any contract or transaction or other companies with which the company of which they are directors is involved. Failure to do this would attract punitive measures.
5. There are several requirements imposed on companies by Ghanaian company law. An example is the requirements that companies should file certain returns and statements at the Companies Registry within 28 days of certain acts occurring. Failure to do this attracts a fine for the company and for officers of the company, including directors.
There are others, but these serve the purpose of this blog.
Thanks, this is quite useful. Just have a few more Qs: When you say Director of any kind, "board member" is included? What do you mean by "This liability stretches to the offense of “contempt of court”? Thats the worst case scenario? Also, how common is it in Ghana for directors to be punished for company offenses?...is responsibility demanded on a forth nightly basis? Thanks again!
ReplyDeleteKajsa:
ReplyDeleteFirst, the full name of "Board" is "Board of Directors". Directors and "Board Members" are the same people. Secondly, contempt of court is simply when the company has shown disrespect to a court by, e.g. flouting an order of the court. One could end up in jail for contempt. Third, directors being punished for company offences is as common as companies being punished for offences. It does not happen nearly enough (which I guess is good or bad, depending on who you are). Fourth, I do not understand your question about responsibility being demanded on a fortnightly basis. Can you rephrase?