DIRECTOR'S GUIDE 2011

Regulation 25(4) states that non-profit companies must maintain adequaterecords of all revenue received from donations, grants and member’s fees,or in terms of funding contracts or arrangements with any party.C Provide for the proper conduct of audit or independent reviewDirectors are obliged to comply with Sections 28–30 of the Act andRegulations 26–29.D Annual financial statements and financial statementsIt is the duty of directors to cause the financial statements or annualfinancial statements of the company to be made out and laid before thecompany. Refer to page 22 (required to be approved by the Board beforecirculated to shareholders, and published).E Directors ReportSection 30(3), page 23.F Business Rescue duties – S137●●King 111 and Section 129 of the Act.G Codified Regime of Directors Duties – Section 76●●●●●●A codified regime of directors’ duties is introduced in the Act –whichoperates in addition to existing common law duties;Section 76 states that a director must exercise the powers and performthe functions of director in good faith and for proper purpose, in the bestinterests of the company and with a degree of care, skill and diligence thatmay reasonably be expected of such a person. See Table C on page 42 foran expansion of Section 76;King 111 recommends that the duties listed in S76 extend to membersof committees (even if not a member of the board).H Disclosure of Personal Financial Interests: Section 75●●●●●●●●IA director (including one appointed as a member of a Board Committee),is required to disclose his personal financial interest in respect of a matterto be considered at a meeting of the board (this is also applicable to arelated person to him and to an alternate director and prescribed officer);He must disclose his interest before it is considered by a meeting of theBoard [as set out in Section 75(4)] and recuse himself by leaving themeeting, without taking part in the discussion;This section does not apply to certain directors in certain circumstances[see item (e) on Table F on page 45 and Section 75(2)].Section 75(7) – as amended by the Amendment Act: A decision by theBoard, or transaction or agreement approved by the Board is valid despiteany personal financial interest of the director or person related to him onlyif it was approved following disclosure of that interest or despite therebeing lack of disclosure, the decision was subsequently ratified by ordinaryresolution of the shareholders following disclosure of that interest or hasbeen declared valid by a court (on application by any interested person).Other DutiesI.1 Duties in terms of the Memorandum of Incorporation●●The Regulations provide a standard set of MOI that companies may use asa basis but may amend to meet their specific needs. The directors shouldfamiliarise themselves with the contents thereof since it will invariablyimpose duties, limitations and/or powers on directors.15