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

Tolvar Co is a private company incorporated in a jurisdiction following the general common law model. Its articles are silent on who may appoint directors. At the first meeting after incorporation, the subscribers want to know how the first directors are normally put in office. Which statement is correct?

First directors are normally named in the incorporation documents or appointed by the subscribers. Later appointments are usually made by the members in general meeting, unless the articles provide otherwise. Auditors and courts play no routine part in appointing the first directors of a company.

  1. AThe first directors are normally named in the incorporation documents or appointed by the subscribers, with later appointments made by the members in general meetingCorrect
  2. BThe first directors must be appointed by the company's auditor before the company can trade
  3. CThe first directors can only be appointed by a court order made on application by the subscribers

Explanation

On formation, the first directors are typically named in the incorporation documents or chosen by the subscribers. After that, the members usually appoint directors by ordinary resolution unless the articles say otherwise. Auditors and courts have no routine role in first appointments.

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