DUTIES OF THE BOARD OF DIRECTORS

Dr. AbdelGadir Warsama

The law company, normally, explains the methodology of electing the first Board of Directors in a public joint stock company or alternatively, if need arises, the selection of the first Board from among founders of the company.

The elected or the selected as the first Board of the company shall promptly elect from its members the Chairman and the Vice-Chairman of the Board. The Chairman shall be the spearhead of the company and the Vice-Chairman takes his place and duties during his absence for whatever reason.

Some company laws mandate that the Chairman and majority of the members of The Board of Directors of the company shall be nationals. From a nationalistic point of view, this could satisfy the bride and dignity of nationals. However, this policy may deprive the company from certain foreign participation that could be needed for internationally developed expertise and transfer of accumulated leadership technology.

The law, moreover, is strict regarding the overwhelming national majority of the Board of Directors (including the Chairman) in certain category of companies. Furthermore, the law specifies that at the beginning of each year the Chairman shall send a list including the names of the Chairman and other members of the Board to the Ministry of Commerce and other competent authorities.

This gives the Ministry of Commerce and the competent authorities, the necessary up-to-date information regarding the composition of the Board of Directors. This is what the law says, however, is it the same in fact.. Don’t think?

A vacancy could occur, for any reason(s), during the tenure of the Board. In such cases, other members of the Board may appoint a new member to fill-in the vacant position in the Board , provided that the appointment of the new member shall be presented to the general assembly of the company during its first meeting following the appointment. The general assembly could ratify or reject the appointment and opt to elect another director, unless the articles of association of the company provides otherwise. The new appointed director shall complete the term of its predecessor.

In case the vacant posts reach one fourth of the number of the Board of Directors the Chairman shall convene a general assembly of the company within a maximum period of three months, for the purpose of electing new members to the Board to fill-in the vacant posts.

The Board of Directors shall perform all necessary duties and responsibilities required for managing the administrative affairs of the company. However, the company law and the articles of association of the company normally provide for certain duties and responsibilities to be exclusively performed by the general assembly of the company. This creates a distinction between the duties of the Board (purely of administrative nature) and the duties of the general assembly (issues of policy and strategy).

The Board, shall not cross the line and assume or undertake the duties of the general assembly. If this occurs for any reason, the acts will be regarded as ultra vires and void because they are outside the jurisdiction of the Board. Some examples of the matters that are exclusively left for the general assembly, include, approval of loan agreements for periods exceeding three years, selling or mortgaging the place of business of the company or other real estate owned by the company, and the most serious point, to absolve members of the Board of Directors of the company from their liabilities.

The Board shall refer such matters to the general assembly of the company because they are sensitive issues and matters affecting the future of the company. Shareholders of the company, through the general assembly, shall be involved actively in these major issues so as to give a real boost to the company and its existence... This is how companies survive and how corporate culture prevails…