DIRECTORS
“The
directors are under Kenya law a body to whom is delegated the duty of managing the
general affairs of the company. A corporate body can only act through
agents and it is of course the duty of those agents so to act best to
promote the interest of the corporation whose affairs they are
conducting”.
Directors
are said to be the brain of the company and occupies a pivotal position
in the structure of the company, and since the directors are the brains
of the company; it is only when the brain functions that the
corporation is said to function.
Board
of Directors is given the powers to manage and run the company. Cap.
486 together with the articles bestows powers to directors to manage.
Members have no right to interfere with such management; infact if
members interfere; the directors have a right to bring an action against
the members to restrain them.
The
directors have an express right to manage the company, but if the
management want to interfere with the Board, then they have to convene
an extra ordinary general meeting and alter the constitution of the
company to allow them interfere.
“If
you want to interfere in the management of the company's affairs,
convene a general meeting and alter the company’s constitution by
passing a resolution obliging the directors to act the way you want”.
Case Law: Automatic Sef Syndicate Ltd vs. Cunningham (1906)
By
its articles of association, the general management and control of the
company was vested in the directors, subject to regulations as might
from time to time be made by extra ordinary resolutions. In particular,
the articles of association conferred on the directors the power to sell
or otherwise deal with any property of the company on such terms as
they may consider fit. The members at a general meeting passed an
ordinary resolution forcing the directors to sell certain property of
the company on certain terms. The directors refused to the effect that
it was directive and therefore declined to sell.
It
was held that the company’s constitution conferred upon directors the
general powers to manage the company, and in particular to decide when
to sell the property of the company and on what terms.
Notwithstanding
the fact that powers to manage the company have been given to the
directors, the members have a right to intervene and take away such
management: -
(a) Where the directors are improperly using the name of the co. in litigation.
(b) If the B.O.D. itself cannot function due to one reason or another the members may intervene.
There
were two members who were also directors of the company. A conflict
arose which rendered them impossible to even communicate face to face
and the only communication was by way of memos. One member went to
court petitioning for winding up under the clause “just and equitable”.
The court agreed with the application, but it was observed that:-
“If
it had been possible to have separate members from these two, the court
have ordered that they take up the management until a new team comes
in”.
In
another instance, (Foster vs. Foster), there was a disagreement and as a
result there was a deadlock in voting. The court said that under those
circumstances where the directors are unable to exercise powers
conferred upon them by the company’s articles, the company/members in a
general meeting would take over the management and appoint a new team.
(c)
Where the directors have acted ultra vires the powers granted to them
or the company itself: - The management can ratify that which the
directors did in excess of their powers. For example, if the articles
might have conferred upon them some powers but they have exceeded the
powers; in that eventuality, the management can take away those powers.
Secondly,
the company did not have the kind of powers the directors exercised,
and therefore did not give them powers. In this case the members can
intervene and remove those directors.
Meaning of a Director
Under Section 2 of the Act, “A director, includes any person occupying the position of director by whatever name called”.
“A
director may be identified by the functions the person performs even
though he may be named differently, for example, Jaduong, Munene and so
on.
A
director may therefore be defined as, “a person having control over the
direction, conduct, management or superintendence of the affairs of a
company”.
What is the position of a person occupying the position of a director but is not duly appointed, is he still a director?
A
person, who acts as a director performs the functions of a director
although not duly appointed and occupies the position of a director, is a
director. This is supported by the phrase “by whatever name called”.
This does not limit the meaning. Infact it extends its meaning to
include a person who performs the functions as a director though called
by another name.