A Director Cannot be Absolved from Responsibilities by Appointing an Alternate Director

Company Law

Reviewing constitution (usually in the context of a corporate transaction) is part of my job as a corporate lawyer. It’s not always fun but it’s always a good refresher of the Companies Act 2016.

While reviewing the constitution of a company, I came across the following provision which made me stop and check the Companies Act 2016.

“A Director shall not be liable for the acts and defaults of any alternate Director appointed by him.”

The above is inconsistent with section 216(2) of the Companies Act 2016 which provides that where the directors have delegated any power, the directors are responsible for the exercise of the power by the delegatee as if the power had been exercised by the directors themselves.

There is exception to section 216(2) of the Companies Act which is based on the directors having reasonable grounds to believe otherwise.

In short, the constitution of a company cannot generally absolve a director from its responsibilities as a director by appointing an alternate director.

This post first appeared on LinkedIn on 22 June 2023.

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