Company Law and Practice (CLP512S)
Unit 12 Office Bearers
Office Bearers
Introduction
Like any other undertaking a company needs to engage employees and agents. In fact, a company does not exist
as an entity in a physical sense, it can only perform its corporate acts and functions through directors, officers and
employees.
The nature of the relationship which a specific person has with the company depends on the circumstances of
each particular case. He/she may be an ordinary employee like a messenger or a clerk, or he/she may be an
officer of the company, running the risk, in certain instances, of incurring civil or criminal liability should the
provisions of the Companies Act not be complied with.
In this unit we will look at some of the office bearers commonly encountered within a company. In each instance
it is important to determine whether the person who has been appointed to that position will have implied
authority to represent the company.
Objectives
Upon completion of this unit you should be able to:
• explain the implications of a person being an officer of a company
• distinguish between “manager” as a legal term and “manager” as a business term
• explain the term “managing director”
• explain the position of the chairperson of the board
• summarise the general duties and responsibilities of the company secretary
• apply the contents of this unit to factual scenarios and give appropriate advice
Additional reading
Cilliers H S, Benade M L, Benade M L, Henning J J, Du plessis J J, Delport P A, D e Koker L, Pretorius J T. (2003).
Entrepreneurial Law. Durban: Butterworths. (Pages 115 - 120).
1 Officers
The Companies Act 28 of 2004 contains numerous references to “officers” of the company. The pattern,
depending on the nature of the activity involved, is to hold either the company, or every director and officer of
the company, or the company as well as every director and officer criminally or civilly liable for non-compliance
with the Act. The Companies Act requires an officer of a company to lodge a written consent to his/her
appointment with the Registrar of Companies, similar to that which is required by a director.
Despite the potential liability of an officer, the Act does not define the term, but merely states that “officer”
includes any managing director, manager or (company) secretary.
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Unit 12 Office Bearers
2 Manager
The Companies Act defines the term “manager” as “any person who is a principal executive officer of the
company for the time being, by whatever name he/she may be designated and whether or not that person is a
director”.
It is clear from the discussion in section 1 above that this person, irrespective of his/her title, will be an officer of
the company. This means that the chief executive officer of a company is responsible, in conjunction with the
directors and the secretary of the company, for a large number of corporate activities and that he/she incurs civil
or criminal liability if the requirements of the Act relating to those activities are not complied with.
Apart from the “manager” as defined in the Act there are a variety of corporate employees described in one way
or another by the word “manager”, for example an advertising manager, branch manager or a section manager.
In such cases "manager" is a term of business and not of law. When the Companies Act refers to a “manager”
this must be taken to mean the principal executive officer of the company.
In terms of the Act, managers are obliged to keep minutes of their meetings in the same way as is required of
directors and all the provisions regarding minutes of directors meetings apply equally to meetings of managers.
3 Managing Director
“Managing director” is not defined in the Act, although reference is made to “managing director” in the definition
of “officer”. A managing director will therefore incur criminal or civil liability if the requirements of the Act are not
complied with.
“Managing director” is not a legal concept with a fixed content, but usually applies to a director to whom all or a
material part of the general powers of control over the affairs of the company have been entrusted either by the
board of directors or in the articles.
Since no specific powers, rights and duties attach in law to the office of managing director, such powers, rights
and duties have to be determined by reference to the articles of the company and the contract (if any) between
the managing director and the company.
In view of the extensive powers and duties usually conferred on a managing director, the scope of his/her implied
authority will normally be greater than that of an ordinary director, and, except in those cases where the outsider
in fact has knowledge to the contrary, or where a particular act is prohibited or regulated in a contrary manner or
the circumstances are suspicious, such outsider is entitled to accept that the managing director has all the powers
which apparently are associated with his/her office.
4 Chairperson of the Board of Directors
A typical provision in the articles of a company is that the board of directors may elect a chairman and determine
the period for which he/she is to hold office.
In the absence of a specific mandate or authorisation by the company in the articles or otherwise, the position of
chairperson of the board of directors differs little from that of an ordinary director. Usually he/she has no
additional powers merely by virtue of his/her chairpersonship. An outsider dealing with the chairperson should
thus ascertain whether in fact he/she has the necessary authority to bind the company.
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Unit 12 Office Bearers
In smaller private companies circumstances may present themselves in which the chairperson of the board of
directors will be authorised, often by implication, to act as managing director. It is clear that, unless otherwise
regulated in the articles, the same person may occupy the positions of both chairman of the board and managing
director. It is, however, nowadays accepted that such a combination of the two positions is not a good corporate
governance practice especially for large public companies as it concentrates considerable powers in one person.
5 The Company Secretary
Although it is not a statutory requirement that a company must appoint a company secretary, this is a common
occurrence, especially in large public companies having a share capital. It is also required by the codes on
corporate governance. If a company does not appoint a full-time company secretary, it is practice to appoint an
outside person or firm to attend to certain company secretarial functions.
The name of the secretary (if any) must be stated on every trade catalogue, trade circular and business letter of a
public company. A company secretary holds a specialised position in a company, and is usually a person with a
financial and/or a legal background. Do not confuse this position with that of the person who does the typing and
the filing!
A company secretary is an employee of the company. If it is permitted by the articles, a secretary may also serve
as a director of his/her employer company. The exact nature of his/her duties will depend on the terms of his/her
employment contract which will, to some extent, be determined by the type and the nature of the company
he/she serves.
Normally he/she must administer the affairs of the company (inter alia sending out notices on behalf of the
company, ensuring compliance with statutory requirements, attending to and lodging statutory returns with the
Registrar, maintaining the shares and other statutory registers, etc.) and he/she must co-ordinate corporate
activity (by, for example, attending meetings of members and of directors, by taking care of the minutes and
dealing administratively with the resolutions of the company).
The company secretary is an officer of the company and accordingly has a legal duty to ensure compliance with
the provisions of the Act and in ensuring good corporate governance. His/her duties will include:
▪ guiding directors as to their duties;
▪ making directors aware of the law and legislation affecting the company and reporting to meetings of
directors and shareholders any failure to comply with the law;
▪ ensuring the recording of minutes of all meetings of shareholders, directors and committees of
directors;
▪ certifying in the company's annual financial statements that the returns required of a public company by
law have been lodged up to date in true and correct form;
▪ ensuring that a copy of the company's annual financial statements is duly sent to every person entitled
thereto by law.
The secretary is the principal administrative officer of the company and owes fiduciary duties towards the
company. In Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd (1971) 3 All ER 16 (CA)) it
was held that a secretary has authority to make representations and enter into contracts on behalf of the
company which fall within the day-to-day running of the company or, as chief administrative officer of the
company, to sign contracts on behalf of the company in regard to administrative matters.
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Unit 12 Office Bearers
Summary
In this unit you learned that, apart from the board of directors a company can also appoint a wide variety of
persons to fulfil certain functions within the corporate structure. While many of these persons will simply be
employees of the company, certain persons are designated as “officers” of a company, which implies that
they can incur criminal and civil liability if the provisions of the Act are not complied with.
References
Davies, D., Cassim,F, H.I, Geach, W., Mongalo,T., Butler, D., Loubser, A., Coetzee,L., Burdette, D. (2014).
Companies and other Business Structures in South Africa (3rd ed.). Cape Town: Oxford University Press
Delport, P. (2011). The New Companies Act Manual. Durban: Lexis Nexis.
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