By Magelah Peter G.

Director

The word “Director” tends to be one of the most confusing word used by many Companies Ltd by Guarantees in Uganda. (Most of the companies operate as NGOs and for purposes of these articles we shall focus our discussion to NGOs). This is mainly because there are directors of a Company who are set by law. These are appointed as such by filing Company Form 20 (and a resolution) with the registrar of Companies. There are also employees of the organization whose title could be “directors” e.g. Director of Programs, Executive Director, Finance Director etc. In this article we try to show the difference but also discuss the duties of directors required by law.

The first step of confusion comes from how many Companies Ltd by gu arantee (NGOs) in Uganda tend to brand their board of directors. Under Company law, the company must have directors (or a board of directors), a number of Companies (NGOs) in Uganda use words such as Trustees, Board of Trustees, Patrons, General Assemble (often confused with membership), Management Committee etc. Directors or whatever name those who occupy this office are given, have to carry out legal roles. 

The second confusion comes from titles given to members of staff of the organization. Titles like Executive Director, Director Programs, and a host of other “directors” at management and staff level. These are not directors that Company law refers to and their meetings, decisions or actions cannot be taken to be decision of “Directors of the Company”.

What then are the obligations of Company Directors?

Company law requires that members of a Company appoint directors. (See our earlier article on the difference between Members and Directors). The role of a director in a Company Ltd by Guarantee is often of a voluntary nature and directors are not expected to receive a salary. They are not expected to be project implementers but are rather supervisors. In an ideal situation Directors should “keep the eyes on [the company] and hands off”. A clear line between supervision and project implementation should exist. Some of the obligations of the directors of a company include;

1.    exercise a degree of skill and care as a reasonable person would do looking after their own business; 

2.    not making personal profits at the company's expense; 

3.    not accepting benefits that will compromise him or her from third parties;

4.    act honestly and carefully in the interest of the company;

5.    ensure whatever they do is in the best interest of the company

6.    act with high level of ethics and integrity

7.    Exercise reasonable care and skill

8.    not compete with the company and where there is conflict of interest, such a conflict is declared 

9.    know, understand and guide on what the company is doing 

10. ensure that the company follows sound financial systems including ensuring the company pays its debts.

Among others.

The above obligations require that at individual level the director exercises high level of integrity and seek knowledge for areas that he or she may not be knowledgeable about. It also demands that actions of directors are taken collectively and all directors are bound by the actions taken by the Board. 

What are the duties or functions of the directors?

These directors are given different roles and duties which are set by law and some have come as a result of practice. In General terms directors’ roles include;

1.    keep proper accounting records;

2.    prepare and file accounts; 

3.    send returns to registrar; 

4.    file tax returns and pay tax (this includes personal tax returns as well as those for the company); 

5.    establish sound company policies and systems

6.    approval annual budgets and work plans

7.    recruiting the executive director or top management of the company

8.    fundraising 

9.    paying annual subscription and other dues that may be due to the company