For
technical reasons the directors are not regarded as employees of the
company of which they are directors. They therefore have no right to be
paid their services unless there is a provision for payment in the
articles.
Table
A, Article 76 of the companys Act provides that “remuneration of the directors shall from
time to time be determined by the company in general meeting”.
Provided the resolution has been passed, the remuneration is payable whether profits are earned or not.
The
remuneration payable to the directors of a company is determined by the
articles of the company or by a resolution passed by the company in
general meeting.
The
directors have no right to be paid for their services and cannot pay
themselves or each other or make presents to themselves out of the
company’s assets unless authorized to do so by the instrument in
writing, for example, articles or by shareholders at a properly convened
meeting.
If
directors are not entitled to remuneration and they pay themselves
remuneration out of company’s funds, they may be compelled to restore it
even though they acted in good faith and honestly believe that the
payment was permissible.
Directors
may be paid traveling, hotel and other expenses properly incurred by
them in attending company’s business. In the absence of such a
provision, a salaried director is not entitled to expenses incurred by
him as they are usually covered by his remuneration.
The remuneration payable to director is a debt from the company, and a director may sue the company for non-payment under Kenya law.
Incase of absence or inadequacy of profits, it can be paid out of profits with approval of the company.