8.1 Qualifications, appointment and disqualification

QUALIFICATIONS OF A DIRECTOR

• Share qualification

The Act does not give a requirement that a director must hold shares and unless otherwise provided by the articles, a director need not hold shares in the company. Financial prudence however requires that directors must have a financial stake in the company, hence a share qualification given in the articles. The Model Articles provide that the share qualification of directors may be fixed by the company in the general meeting in which case the Act provides that:

1. Each director must acquire and maintain qualification shares within 2 months after his appointment or such shorter time as may be fixed by the articles.
2. If he fails to acquire that qualification within 2 months, he automatically ceases to be a director.
3. He cannot be re-appointed a director unless he has obtained his qualification shares.

If he Acts as a director after the expiry of 2 months without taking the qualification of shares he is liable to a fine.

• Age qualification

Section 131 fixes the minimum age for the appointment of directors. It states that no person is capable of being appointed as a director of a company if at the time of his appointment he has not attained the age of 18 years.

• Un-discharged bankrupt

An un-discharged bankrupt may not be a director. This is a statutory requirement and overrides the articles. Such a person is not allowed to participate in the management of the company directly or indirectly.

DISQUALIFICATION OF DIRECTORS

Directors may become disqualified either by the Act or the articles on the following grounds;

1. He has ceased to be a director by failure to take up his qualification shares within two months of his appointment.
2. He is an undischarged bankrupt or makes any arrangement or compromise with his creditors generally.
3. He becomes prohibited from being a director by reason of any order of a court restraining fraudulent person from managing companies
4. He becomes of unsound mind
5. He resigns his office by notice in writing to the company and the company accept it.
6. He is absent without permission for more than 6 months from the meetings of directors held within that period.
7. If he becomes disqualified under section 131 which lays down the minimum age for appointment of directors.