Section
177 of the Companys Act provides that every company shall have at lest two directors while
every private companies and every other company registered before 1962
shall have at least one director.
Under
Table A, Article 75, the actual number of the directors would initially
be decided upon by the subscribers of the memorandum (promoters) and
until so determined, all of them shall be the first directors.
Table
A, Article 94 empowers the company from time to time by ordinary
resolution to increase or reduce the number of its directors.
The following are the various stages of appointment of directors under Kenya law:-
(a) The first directors of the company.
(b) Subsequent appointment of directors.
(c) Appointment to fill a vacancy.
(d) Appointment of alternate director.
(e) Appointment of Managing Director.
(a) First Directors
Article
75 provides that the names of the first directors shall be decided in
writing by the subscribers of the memorandum of association or a
majority of them.
They are usually appointed by promoters of company and normally their names are indicated in the articles of association.
If
promoters do not appoint the first director, then the tradition has
been to follow the provision in the Articles 75 of Table A, that is,
people who subscribe to the memorandum of association will become and be
regarded as the first directors, until proper appointment is done.
They shall hold office until the directors are appointed at Annual
General Meeting.
The
articles may also provide that both the number and the names of the
first directors shall be determined in writing by the subscribers to
memorandum.
(b) Subsequent Directors
The
subsequent directors are under Kenya laws appointed by the members in general meeting
beginning from the first annual general meeting at which all the first
directors retire from office and the members are given the first
opportunity to elect directors of their own choice. The retiring
directors are however eligible for election under Article 91.
At
the second annual general meeting, one third of the directors are to
retire from office, the ones to retire being the ones who have been
longest in office since their last election.
As
between persons who became directors on the same day, those to retire
shall be agreed upon amongst themselves otherwise it shall be determined
by lot. One third of the board shall thereafter retire by rotation
annually.
(c) Casual Appointment/vacancy
Articles
95 permits the aboard of directors to fill a vacancy in the board or to
get an additional director to join the board for practical reasons
provided that the appointment does not cause the number of directors to
exceed the limit imposed by the articles. The person appointed this way
will hold office until the next annual general meeting. He will then
be eligible for re-election, but his appointment will not be taken into
account when deciding on the directors who shall retire from office.
(d) Alternate Directors
An
alternate director is one appointed by another director to temporarily
represent him during his absence or inability in the Board of
Directors. This power can be exercised only if it is permitted in the
articles of association. The common law rule “delegatus non potest
delegare”, states that a director has no authority to appoint an
alternate director.
However
where the article of association is silent about the appointment of
alternate director, a director can still appoint an alternate director.
When
a director appoints an alternate director, he may indicate the powers
which such an alternate director may exercise on his behalf and those
which he may not, for example, he may participate in Board meetings and
sign documents but not more than that.
He cannot hold office for a period longer than that permissible to the original director in whose place he has been appointed.
The
alternate director may be another director or an outsider. If he is a
director, he would have the vote of the absentee in addition to his own
vote.
(e) The Managing Director
A
Managing Director is under Kenya law part of the subsequent directors. It is governed
by company practice because it is always a company’s affair. The Act
itself does not contain direct provisions on the appointment of a
Managing Director. It is found in the articles of association, not the
Act.
A
Managing Director who by virtue of agreement with the company, or of a
resolution passed by the company in a general meeting, or by virtue of
its memorandum or articles, is entrusted with substantial powers of
management.
A
director so appointed shall not whilst holding that office be subject
to retirement by rotation but his appointment shall be automatically
terminated if he ceases due to any cause, to be a director.
A
Managing Director like any director can be removed at any time from
office by a general meeting irrespective of the fact that this duration
of his appointment is not yet over. But where his services have been
terminated in breach of his terms, he is entitled to claim compensation.
Managing Director receives compensation as may be determine by directors.