By Paul Raby
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309 as a justification for their actions. 2), if a director is personally interested in any matter to be discussed at a board meeting he must disclose the interest and he may then be prohibited from voting and being included as part of the quorum. qxp 21/7/05 18 3:28 pm Page 18 PART ONE Best practice: company stakeholders Service contracts The service contracts of directors must be held at the registered office and be available for inspection by members. The only exception is contracts capable of being lawfully terminated within twelve months; these do not need to be held at the registered office.
35A provides the current law. 2 Section 35A of the Companies Act 1985 constructive notice Deemed knowledge. A person dealing with a company traditionally was assumed to know of matters registered at Companies House. 35A, CA 1985 and provides that a person dealing with the company in good faith can generally assume that both the company and the person which whom he is dealing have the capacity to enter into the transaction that is being made. Section 35B states that there is no duty to enquire as to the director’s authority and there is no constructive notice of any provision of the company’s constitution limiting authority.
We will look at the concept of ultra vires and will examine directors’ liability and when this can be limited. We also look at what happens when directors are also shareholders. The difference between the ownership and management of companies will be clearly established. Once we have the basic knowledge of what a director is we will move on to the role of the board of directors, asking why boards are needed, how they are constituted and the rules governing directors’ (board) meetings. We also look briefly at the information the board is required to disclose such as the annual report.