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ACCA Applied Skills · Corporate and Business Law (Global) · Company directors

Orla Ltd, a private company, has articles requiring at least two directors. It currently has one director, Mr Shaw, who wishes to appoint his friend as the second director. Which action properly achieves this?

The second director is appointed by the method in the articles, usually by the existing director where the articles permit or by ordinary resolution of the members, and the friend must consent to act. Acting without appointment does not create a valid appointment, and banks or courts are not involved.

  1. AMr Shaw alone, if the articles allow, or the members by ordinary resolution, may appoint the second director, who then consents to actCorrect
  2. BThe friend simply starts acting and becomes a director automatically
  3. CThe company's bank manager appoints the second director
  4. DAppointment is only possible after a court order

Explanation

A director is appointed by the method in the articles, typically by the board or by ordinary resolution of the members, and the person must agree to act. Merely acting does not make someone a validly appointed director, though they could be a de facto director. Banks and courts have no role in a routine appointment.

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