The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 276. Liability of a person where not duly appointed
Where a person not duly appointed as a director acts as such on behalf of the company, his act does not bind the company and he is personally liable for such action, but where it is the company which holds him out as director, the company is bound by his acts.
Section 277. Share qualification of directors
(1) The shareholding qualification for directors may be fixed by the articles of association of the company and unless so fixed no shareholding qualification shall be required.
(2) It is the duty of every director who is by the articles of the company required to hold a specified share qualification, and who is not already so qualified, to obtain qualification within two months after his appointment.
(3) The office of director of a company is vacated if the director does not, within two months from the date of his appointment, obtain his qualification or after the expiration of the said period, he ceases at any time to hold his shareholding qualification.
(4) A person vacating office under this section is incapable of being re-appointed a director of the company until he has obtained his shareholding qualification.
(5) If, after the expiration of the period, any unqualified person acts as a director of the company, he is liable to a penalty in such amount as the Commission shall specify in its regulations for every day between the expiration of the said period or the day on which he ceased to be qualified, as the case may be, and the last day on which it is proved that he acted as a director.
Section 278. Duty of directors to disclose age and multiple directorship to the company
(1) Any person who is appointed or to his knowledge proposed to be appointed director of a public company and who is 70 or more years old shall disclose this fact to the members at the general meeting.
(2) Any person who is proposed to be appointed a director of a public company shall disclose any position he holds as a director in any other public company at the meeting in which he is proposed for appointment as a director.
(3) Any person who fails to disclose his age or multiple directorship as required under this section shall, without prejudice to the provisions of section 307 (4) of this Act, be liable to a penalty in such amount as the Commission shall specify in its regulations.
What this means
Short answer
No shareholding is required to be a director unless the articles fix one, and a director who must hold shares has two months to acquire them (section 277). A person appointed to a public company board who is 70 or older must disclose that fact, and must also disclose other public company directorships (section 278).
Share qualification
Section 277(1) lets the articles fix a shareholding qualification for directors. If they do not, no shareholding qualification is required. Where the articles require one and a director does not yet hold the shares, he must obtain the qualification within two months of appointment (section 277(2)).
Missing the deadline has consequences. The office is vacated if the director does not qualify within two months, or if he later stops holding the qualifying shares (section 277(3)). He cannot be reappointed until he qualifies again (section 277(4)). If he keeps acting as a director while unqualified, he is liable to a daily penalty set by the Commission (section 277(5)).
Disclosing age and other directorships
Section 278 applies to public companies. A person appointed, or to his knowledge proposed to be appointed, as a director who is 70 or more must disclose that fact to the members at the general meeting (section 278(1)). A person proposed as a director must also disclose any position he holds as a director in any other public company at the meeting where he is proposed (section 278(2)). Failing to disclose either brings a penalty set by the Commission (section 278(3)).
Related rules
Appointing a director who is 70 or older needs special notice that states the person’s age (section 282). A person may not be a director of more than five public companies (section 307).
Questions and answers
Does a director have to own shares?
Only if the articles say so (section 277(1)). If they do, the director has two months from appointment to qualify (section 277(2)).
What happens if a director does not qualify in time?
The office is vacated and he cannot be reappointed until he qualifies (section 277(3) and (4)).
Must a director disclose being 70 or older?
In a public company, yes. A person appointed or proposed who is 70 or more must disclose it to the members at the general meeting (section 278(1)).
Spotted a mistake? Tell us and we will check it.