• 5 days ago
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Things To Know About Your Role As A Board Member, Before You Sign “I CONSENT”

By Ace Ankumah… 

There are soooo many of us who have accepted to be directors of companies and signed consent letters but haven’t attended or been invited to a single meeting. Even if you attend a meeting you only get the papers right there at the meeting with between precious little to no time to go through them or ask proper questions. You suffer through the meeting, bored. But you enjoy the coffee, juice, cognac and cakes while voting to accept everything proposed (the budget, audited accounts, everything), with your eyes firmly fixed on the prize for the day – that packed lunch and the sitting allowance. Once in a while or after each meeting you get an envelope containing a wad of cash that makes you happy. You have no idea what you have let yourself into.

In the letter, the promoters of a new company offered me a seat on the board, saying “we want to honour you.” They sounded a tad cheesed off when I turned it down. Who turns down an offer? But I wasn’t bothered. You see, I do not accept all board appointments. I sit down and weigh myself, my interest, my time, my energy, my existing commitments and even my hidden and unspoken biases, before giving an answer…, which is usually a polite but firm “I am flattered, but no, thank you.”

Friend, the prospect of earning some money on the side, called “directors’ fees” and maybe some benefits does not count. SERVING ON THE BOARD OF A COMPANY ISN’T NECESSARILY AN HONOUR BESTOWED. IT IS FOR THE MOST PART A DUTY IMPOSED! Those are onerous duties imposed by the law and you ought to know and appreciate them in the light of the company concerned before you sign under that letter that says “I ABC hereby consent to be appointed as a director of XYZ Company Ltd.”

FIRST, grab a copy of the Companies Act, and read sections 203 to 208. Try very very hard to understand what they say. If you don’t, find a lawyer. It’s for your own good.*

SECOND, remember this summary from two Ghanaian cases:

In ASAFU-ADJAYE V. AGYEKUM [1984-86] 1 GLR 382 the court explained that a director, by virtue of his duties as defined under section 203, stands in a FIDUCIARY RELATIONSHIP towards the company and must OBSERVE THE UTMOST GOOD FAITH towards the company in any transaction with it or on its behalf. He is to ACT IN THE BEST INTERESTS OF THE COMPANY to further its business and PROMOTE THE PURPOSE FOR WHICH IT WAS FORMED. Under section 205, he is not, without the consent of the company, to place himself in a position in which HIS DUTIES TO THE COMPANY CONFLICTED OR MIGHT CONFLICT WITH HIS PERSONAL INTERESTS. Under section 206 he has no consent unless he makes a full disclosure of all material facts, including the nature and extent of his interest.

In DIKYI & OTHERS V. AMEEN SANGARI INDUSTRIES LTD. [1992] 1 GLR 61, the court repeated that by the provisions of section 203 of the Code, a director of a company stands in a FIDUCIARY RELATIONSHIP with the company and he MUST OBSERVE THE UTMOST GOOD FAITH in his dealing with the company or on its behalf. And, under the provisions of section 206, a director of a company shall not, without the company’s consent, place himself in a situation where HIS DUTY TO THE COMPANY CONFLICTS WITH OR MAY CONFLICT WITH HIS PERSONAL INTEREST OR HIS DUTIES TO OTHER PERSONS. Conflict of duties is just as objectionable as a conflict of interests.

THIRD, remember that under section 209, a director who commits any breach of the duties is liable as follows
(a) compensation to the company for any loss resulting from the breach,
(b) account to the company for any profit resulting from the breach, and
(c) rescission of any contract or transaction entered into between the director and the company, in breach of the duties.

FOURTH, if you get involved in offences involving fraud, dishonesty, breach of duties, or offences in connection with the promotion, formation or management of bodies corporate, a court could, on the basis of section 186, disqualify you from directorship of any other companies.

As the court said in IN RE WEST COAST DYEING INDUSTRY LIMITED, ADAMS V. TANDOH [1984-86] 2 GLR 561, section 186 made a general provision and did not indicate or specify the type of proceedings in which the court could restrain fraudulent persons and criminals from managing the affairs of companies. Its object is to safeguard the interests of members of the public who are shareholders of, or have invested in or given credit to companies, and to ensure that the assets and investments were managed only by honest persons as directors and not by frauds or persons with criminal propensity. Irrespective of the type of proceedings before the court, the court had a discretion to resort to section 186, and in a fitting case, make an order on its own motion preventing criminals and fraudulent persons from managing companies. The court added that section 186 does not even require conclusive proof of a criminal offence, and the person concerned need not be a convicted person. All that is required is that it should appear to the court that the conduct of the person or the matters complained of amounted to a criminal offence and like the breach of duty or fraud, the crime should have been committed in relation to a body corporate.

So basically, be careful before you accept. And when you accept and you see that it is not going in the direction you are comfortable with, grab a piece of paper and ‘unaccept’.

PS: In Nigeria, the companies act is called the Corporate And Allied Matters Act. The latest version can be found online, by typing the name in Google.

Things To Know About Your Role As A Board Member, Before You Sign “I CONSENT” was last modified: August 16th, 2018 by Obiageli Asika