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Companies - Directors And Secretaries - Their Powers And Duties (Ss 126-163)

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126.   Meaning of "director" and "Board"

            (1) In this Act, "director", in relation to a company, includes -

     (a)     a person occupying the position of director or alternate director of the company by whatever name called; and

     (b)     for the purposes of sections 130 to 136, 140 to 144 and 158 -

           (i)       a person in accordance with whose directions or instructions a person referred to in paragraph (a) of this subsection may be required or is accustomed to act,

          (ii)       a person in accordance with whose directions or instructions the Board of the company may be required or is accustomed to act, and

          (iii)       a person who exercises or who is entitled to exercise or who controls or who is entitled to control the exercise of powers which, apart from the constitution of the company, would fall to be exercised by the Board; and

     (c)     for the purposes of sections 140 to 144 a person to whom a power or duty of the Board has been directly delegated by the Board with the person’s consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the Board.

            (2) Paragraphs (b) and (c) of subsection (1) do not include a person to the extent that the person acts only in a professional capacity.

            (3) In this Act, the terms "Board" and "Board of directors", in relation to a company, mean -

     (a)     directors of the company who number not less than the required quorum acting together as a Board of directors; or

     (b)     if the company has only one director, that director.

127.   Management of company

            (1) The business and affairs of a company shall be managed by, or under the direction or supervision of, the Board of the company.

            (2) The Board of a company has all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

            (3) Subsections (1) and (2) are subject to any modifications, exceptions, or limitations contained in this Act or in the company’s constitution.

128.   Major transactions

            (1) A company shall not enter into a major transaction or make a substantial gift unless the transaction is -

     (a)     approved by special resolution; or

     (b)     contingent on approval by special resolution.

            (2) In this section -

            "assets" includes property of any kind, whether tangible or intangible;

            "major transaction", in relation to a company, means -

     (a)     the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of the company’s assets before the acquisition; or

     (b)     the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the company’s assets before the disposition; or

     (c)     a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than half the value of the company’s assets before the transaction;

            "substantial gift" in relation to a company means making voluntary contributions to any charitable or other fund, other than a pension fund for the benefit of employees of the company or a related corporation, of any amounts which, in any financial year, will in the aggregate exceed P100,000, or two per cent of the net profits of the company for the last preceding financial year, whichever is the lesser.

            (3) Nothing in the definition of the term "major transaction" in subsection (2)(c) applies by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company the value of which is more than half the value of the company’s assets for the purpose of securing the repayment of money or the performance of an obligation.

            (4) No lender or other person dealing with a company shall be concerned to see or inquire whether the conditions of this section have been fulfilled and no debt incurred or contract entered into with the company by a person dealing with it shall be invalid or ineffectual, except in the case of actual notice to that person, at the time when the debt was incurred or the contract was entered into, that the company was acting in breach of this section.

129.   Delegation of powers

            (1) Subject to any restrictions in the constitution of the company, the Board of a company may delegate to a committee of directors, a director or employee of the company, or any other person, any one or more of its powers other than its powers under any of the sections of this Act set out in the Third Schedule.

            (2) A Board that delegates a power under subsection (1) is responsible for the exercise of the power by the delegate as if the power had been exercised by the Board, unless the Board -

     (a)     believed on reasonable grounds at all times before the exercise of the power that the delegate would exercise the power in conformity with the duties imposed on directors of the company by this Act and the company’s constitution; and

     (b)     has monitored, by means of reasonable methods properly used, the exercise of the power by the delegate.

130.   Duty of directors to act in good faith and in best interest of company

            (1) Subject to this section it shall be the duty of the directors of a company -

     (a)     to exercise their powers in accordance with this Act and with the limits and subject to the conditions and restrictions established by the company’s constitution;

     (b)     to obtain the authorisation of a general meeting before doing any act or entering into any transaction for which the authorisation or consent of a general meeting is required by this Act or by the company’s constitution;

     (c)     to exercise their powers honestly in good faith in the best interests of the company and for the respective purposes for which such powers are explicitly or impliedly conferred;

     (d)     to exercise the degree of care, diligence and skill required by section 158;

     (e)     not to agree to the company incurring any obligation unless the director believes at that time, on reasonable grounds that the company will be able to perform the obligation when it is required to do so;

     (f)      to account to the company for any monetary gain, or the value of any other gain or advantage, obtained by them in connection with the exercise of their powers, or by reason of their position as directors of the company, except remuneration, pensions provisions and compensation for loss of office in respect of their directorships of any company which are dealt with in accordance with section 159;

     (g)     not to make use of or disclose any confidential information received by them on behalf of the company as directors otherwise than as permitted and in accordance with section 140;

     (h)     not to compete with the company or become a director or officer of a competing company, unless it is approved by the company under section 133;

     (i)      if directors are interested in a transaction to which the company is a party to disclose such interest pursuant to sections 134 and 135;

     (j)      not to use any assets of the company for any illegal purpose or a purpose in breach of paragraphs (a) and (c), and not to do, or knowingly allow to be done, anything by which the company’s assets may be damaged or lost (otherwise than in the ordinary course of carrying on its business);

     (k)     to transfer forthwith to the company all cash or assets acquired on its behalf (whether before or after its incorporation) or as the result of employing its cash or assets, and until such transfer is effected to hold such cash or assets on behalf of the company and to use it only for the purposes of the company;

     (l)      to attend meetings of the directors of the company with reasonable regularity, unless prevented from so doing by illness or other reasonable excuse;

     (m)    to keep proper accounting records in accordance with sections 189 and 190.

            (2) A director of a company that is a wholly-owned subsidiary may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company, act in a manner which the director believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.

            (3) A director of a company that is a subsidiary (but not a wholly owned subsidiary) may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company and with the prior agreement of the shareholders (other than its holding company), act in a manner which the director believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.

            (4) A director of a company incorporated to carry out a joint venture between the shareholders may, when exercising powers or performing duties as a director in connection with the carrying out of the joint venture, if expressly permitted to do so by the constitution of the company, act in a manner which the director believes is in the best interests of a shareholder or shareholders, even though it may not be in the best interests of the company.

            (5) Subject to subsection (6) the duties imposed by this section shall be owed to the company, and not to the shareholders, debenture holders or creditors of the company.

            (6) An application may be made to the court by any shareholder or in the case of a breach of paragraphs (a), (b), (j), (k) and (m) of subsection (1) by any debenture holder for a declaration that any act or transaction, or proposed act or transaction, by the directors or any director or former director involves a breach of any of their said duties, and an interdict to restrain the directors or any director or former director from doing any such proposed act or entering into any such proposed transaction; and

            (7) An action for damages for breach of the said duties may be brought in the name of the company by a member under section 166.

131.   Exercise of powers in relation to employees

            (1) Nothing in section 130 shall limit the power of a director to make provision, for the benefit of employees of the company, in connection with the company ceasing to carry on the whole or part of its business.

            (2) In this section -

            "employees" includes former employees and the dependants of employees or former employees; but does not include an employee or former employee who is or was a director of the company; and

            "company" includes a subsidiary of a company.

132.   Use of information and advice

            (1) Subject to subsection (2), a director of a company, when exercising powers or performing duties as a director, may rely on reports, statements, and financial data and other information prepared or supplied, and on professional or expert advice given, by any of the following persons;

     (a)     an employee of the company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned;

     (b)     a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person’s professional or expert competence;

     (c)     any other director or committee of directors upon which the director did not serve in relation to matters within the director’s or committee’s designated authority.

            (2) Subsection (1) applies to a director only if the director -

     (a)     acts in good faith;

     (b)     makes proper inquiry where the need for inquiry is indicated by the circumstances; and

     (c)     has no knowledge that such reliance is unwarranted.

133.   Approval of the company

            (1) The approval of the company for the purposes of section 130(1)(h) and of section 140(1)(d) shall require that after full disclosure of all material facts, including the nature and extent of any interest of the director, the transaction has been specifically authorised by either-

     (a)     a form of resolution which has been circulated to all the members and is signed by three-fourths of all members entitled to attend and vote at a general meeting; or

     (b)     an ordinary resolution of the company passed at a general meeting at which neither the director concerned, nor the holder of any share in which he is beneficially interested, or held by any nominee or relative of the director either directly or indirectly, has voted as member on such resolution, or if such person has voted such vote or votes are not counted.

            (2) Subject to subsection (3) the approval of the company in accordance with subsection (1) may be given either before or after the occurrence of the transaction to which it relates.

            (3) A resolution approving a transaction or transactions or series of related transactions which has or have already taken place shall not be effective for purposes of subsection (1) unless it was signed or passed not later than 15 months after the date when the transaction or the first of the series of transactions took place.

134.   Meaning of "interested"

            (1) Subject to subsection (2), for the purposes of this Act, a director of a company is interested in a transaction to which the company is a party if, and only if, the director -

     (a)     is a party to, or will or may derive a material financial benefit from, the transaction;

     (b)     has a material financial interest in another party to the transaction;

     (c)     is a director, officer, or trustee of another party to, or person who will or may derive a material financial benefit from, the transaction, not being a party or person that is-

           (i)       the company’s holding company being a holding company of which the company is a wholly-owned subsidiary, or

          (ii)       a wholly-owned subsidiary of the company, or

          (iii)       a wholly-owned subsidiary of a holding company of which the company is also a wholly-owned subsidiary;

     (d)     is the parent, child, or spouse of another party to, or person who will or may derive a material financial benefit from, the transaction; or

     (e)     is otherwise directly or indirectly materially interested in the transaction.

            (2) For the purposes of this Act, a director of a company is not interested in a transaction to which the company is a party if the transaction comprises only the giving by the company of security to a third party which has no connection with the director, at the request of the third party, in respect of a debt or obligation of the company for which the director or another person has personally assumed responsibility in whole or in part under a guarantee, indemnity, or by the deposit of a security.

135.   Disclosure of interest

            (1) A director of a company shall, forthwith after becoming aware of the fact that he or she is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register (if it is required to keep one), and, if the company has more than one director, disclose to the Board of the company and enter in the minutes of directors meetings -

     (a)     if the monetary value of the director’s interest is able to be quantified, the nature and monetary value of that interest; or

     (b)     if the monetary value of the director’s interest cannot be quantified, the nature and extent of that interest.

            (2) A director of a company is not required to comply with subsection (1) if -

     (a)     the transaction or proposed transaction is between the director and the company; and

     (b)     the transaction or proposed transaction is or is to be entered into in the ordinary course of the company’s business and on usual terms and conditions.

            (3) For the purposes of subsection (1), a general notice entered in the interests register or disclosed to the Board to the effect that a director is a shareholder, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction.

            (4) A failure by a director to comply with subsection (1) does not affect the validity of a transaction entered into by the company or the director.

            (5) Every director who fails to comply with subsection (1) shall be guilty of an offence and liable to the penalty set out in section 492(2).

136.   Avoidance of transactions

            (1) A transaction entered into by the company in which a director of the company is interested may be avoided by the company at any time before the expiration of six months after the transaction is disclosed to all the shareholders (whether by means of the company’s annual report or otherwise).

            (2) A transaction cannot be avoided if the company receives fair value under it.

            (3) For the purposes of subsection (2), the question whether a company receives fair value under a transaction is to be determined on the basis of the information known to the company and to the interested director at the time the transaction is entered into.

            (4) If a transaction is entered into by the company in the ordinary course of its business and on usual terms and conditions, the company is presumed to receive fair value under the transaction.

            (5) For the purposes of this section -

     (a)     a person seeking to uphold a transaction and who knew or ought to have known of the director’s interest at the time the transaction was entered into has the onus of establishing fair value; and

     (b)     in any other case, the company has the onus of establishing that it did not receive fair value.

            (6) A transaction in which a director is interested can only be avoided on the ground of the director’s interest in accordance with this section or the company’s constitution.

137.   Effect on third parties

            The avoidance of a transaction under section 136 does not affect the title or interest of a person in or to property which that person has acquired if the property was acquired -

     (a)     from a person other than the company;

     (b)     for valuable consideration; and

     (c)     without knowledge of the circumstances of the transaction under which the person referred to in paragraph (a) of this section acquired the property from the company.

138.   Application of sections 135 and 136 in certain cases

            Nothing in section 135 and section 136 applies in relation to -

     (a)     remuneration or any other benefit given to a director in accordance with section 157; or

     (b)     an indemnity given or insurance provided in accordance with section 159.

139.   Interested director may vote

            Subject to the constitution of the company, a director of a company who is interested in a transaction entered into, or to be entered into, by the company, may -

     (a)     vote on a matter relating to the transaction;

     (b)     attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purpose of a quorum;

     (c)     sign a document relating to the transaction on behalf of the company; and

     (d)     do any other thing in his capacity as a director in relation to the transaction, as if the director were not interested in the transaction.

140.   Use of company information

            (1) A director of a company who has information in his capacity as a director or employee of the company, being information that would not otherwise be available to him, shall not disclose that information to any person, or make use of or act on the information, except -

     (a)     for the purposes of the company;

     (b)     as required by law;

     (c)     in accordance with subsection (2); or

     (d)     in any other circumstances authorised by the constitution, or approved by the company under section 133.

            (2) A director of a company may, if authorised by the Board under subsection (3),and if particulars of the authorisation are entered in the interests register, if the company has or is required to keep an interests register (or is otherwise disclosed to the Board and entered in the minutes of directors meetings) disclose information to -

     (a)     a person whose interests the director represents; or

     (b)     a person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director’s powers and duties and, if the director discloses the information, the name of the person to whom it is disclosed shall be entered in the interests register or in the minutes of a directors meetings which ever is applicable, and a director if so authorised and on entering the particulars of the authorisation in the interests register or minutes of directors meetings, may otherwise disclose, make use of, or act on the information.

            (3) The Board may authorise a director to disclose, make use of, or act on information if it is satisfied that to do so will not be likely to, prejudice the company.

141.   Meaning of "relevant interest"

            (1) For the purposes of section 143, a director of a company has a relevant interest in a share issued by the company (whether or not the director is registered in the share register as the holder of it) if the director -

     (a)     is a beneficial owner of the share;

     (b)     has the power to exercise any right to vote attached to the share;

     (c)     has the power to control the exercise of any right to vote attached to the share;

     (d)     has the power to acquire or dispose of the share; or

     (e)     has the power to control the acquisition or disposition of the share by another person; or

     (f)      under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share (whether or not that person is a party to it) -

           (i)       may at any time have the power to exercise any right to vote attached to the share,

          (ii)       may at any time have the power to control the exercise of any right to vote attached to the share,

          (iii)       may at any time have the power to acquire or dispose of, the share, or

         (iv)       may at any time have the power to control the acquisition or disposition of the share by another person.

            (2) Where a person would, if that person were a director of the company, have a relevant interest in a share by virtue of subsection (1) and -

     (a)     that person or its directors are accustomed or under an obligation, whether legally enforceable or not, to act in accordance with the directions, instructions, or wishes of a director of the company in relation to -

           (i)       the exercise of the right to vote attached to the share,

          (ii)       the control of the exercise of any right to vote attached to the share,

          (iii)       the acquisition or disposition of the share, or

         (iv)       the exercise of the power to control the acquisition or disposition of the share by another person;

     (b)     a director of the company has the power to exercise the right to vote attached to 20 per cent or more of the shares of that person;

     (c)     a director of the company has the power to control the exercise of the right to vote attached to 20 per cent or more of the shares of that person;

     (d)     a director of the company has the power to acquire or dispose of 20 per cent or more of the shares of that person; or

     (e)     a director of the company has the power to control the acquisition or disposition of 20 per cent or more of the shares of that person, that director has a relevant interest in the share.

            (3) A person who has, or may have, a power referred to in any of paragraphs (b) to (f) of subsection (1), has a relevant interest in a share regardless of whether the power -

     (a)     is expressed or implied;

     (b)     is direct or indirect;

     (c)     is legally enforceable or not;

     (d)     is related to a particular share or not;

     (e)     is subject to restraint or restriction or is capable of being made subject to restraint or restriction;

     (f)      is exercisable presently or in the future;

     (g)     is exercisable only on the fulfilment of a condition;

     (h)     is exercisable alone or jointly with another person or persons.

            (4) A power referred to in subsection (1) exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.

            (5) A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them, whether or not it is legally enforceable.

142.   Relevant interests to be disregarded in certain cases

            (1) For the purposes of section 143, no account shall be taken of a relevant interest of a person in a share if -

     (a)     the ordinary business of the person who has the relevant interest consists of, or includes, the lending of money or the provision of financial services, or both, and that person has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of that person;

     (b)     that person has the relevant interest by reason only of acting for another person to acquire or dispose of that share on behalf of the other person in the ordinary course of business of a sharebroker and that person is a member of a stock exchange;

     (c)     that person has the relevant interest solely by reason of being appointed as a proxy to vote at a particular meeting of members, or of a class of members, of the company and the instrument of that person’s appointment is produced before the start of the meeting in accordance with clause 6(4) of the Second Schedule or by a time specified in the company’s constitution, as the case may be;

     (d)     that person -

           (i)       is a trustee corporation or a nominee company, and

          (ii)       has the relevant interest by reason only of acting for another person in the ordinary course of business of that trustee corporation or nominee company; or

     (e)     the person has the relevant interest by reason only that the person is a bare trustee of a trust to which the share is subject.

            (2) For the purposes of subsection (1)(e), a trustee may be a bare trustee notwithstanding that he is entitled as a trustee to be remunerated out of the income or property of the trust.

143.   Disclosure of share dealing by directors

            (1) A person who -

     (a)     is a director of a public company on the commencement of this Act; or

     (b)     becomes a director of a public company, and who has a relevant interest in any shares issued by the company shall forthwith, disclose to the Board the number and class of shares in which the relevant interest is held and the nature of the relevant interest, and ensure that the particulars disclosed to the Board are entered in the interests register.

            (2) A director of a public company who acquires or disposes of a relevant interest in shares issued by the company shall, forthwith after the acquisition or disposition, -

     (a)     disclose to the Board -

           (i)       the number and class of shares in which the relevant interest has been acquired or the number and class of shares in which the relevant interest was disposed of, as the case may be,

          (ii)       the nature of the relevant interest,

          (iii)       the consideration paid or received, and

         (iv)       the date of the acquisition or disposition; and

     (b)     ensure that the particulars disclosed to the Board under paragraph (a) of this subsection are entered in the interests register.

144.   Restrictions on share dealing by directors

            (1) If a director of a company has information in that person’s capacity as a director or employee of the company or a related company, being information that would not otherwise be available to the director, but which is information material to an assessment of the value of shares or other securities issued by the company or a related company, the director may acquire or dispose of those shares or securities if -

     (a)     in the case of an acquisition, the consideration given for the acquisition is not less than the fair value of the shares or securities; or

     (b)     in the case of a disposition, the consideration received for the disposition is not more than the fair value of the shares or securities.

            (2) For the purposes of subsection (1), the fair value of shares or securities is to be determined on the basis of all information known to the director or publicly available at the time.

            (3) Subsection (1) does not apply in relation to a share or security that is acquired or disposed of by a director only as a nominee for the company or a related company.

            (4) Where a director acquires shares or securities in contravention of subsection (1)(a), the director is liable to the person from whom the shares or securities were acquired for the amount by which the fair value of the shares or securities exceeds the amount paid by the director.

            (5) Where a director disposes of shares or securities in contravention of subsection (1)(b), the director is liable to the person to whom the shares or securities were disposed of for the amount by which the consideration received by the director exceeds the fair value of the shares or securities.

            (6) Nothing in this section applies in relation to a company to which section 324 applies.

145.   Number of directors

            A public company shall have at least two directors and a private company other than a close company shall have at least one director who in each case shall be ordinarily resident in Botswana.

146.   Qualifications of directors

            (1) A natural person who is not disqualified by subsection (2) of this section may be appointed as a director of a company.

            (2) The following persons are disqualified from being appointed or holding office as a director of a company -

     (a)     a person who is under 18 years of age;

     (b)     except with the leave of the court a person whose estate is sequestrated as insolvent or who is an un-rehabilitated insolvent whether in Botswana or elsewhere;

     (c)     a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company under sections 500 and 501;

     (d)     except with the leave of the court a person who has been at any time convicted (whether in Botswana or elsewhere) of theft, fraud, forgery or uttering a forged document, or perjury and has been sentenced therefore to serve a term of imprisonment without the option of a fine or to a fine exceeding P5,000;

     (e)     except with the leave of the court a person who has been removed by a competent court from an office of trust on account of misconduct;

     (f)      a person who has been adjudged to be of unsound mind; and

     (g)     in relation to any particular company, a person who does not comply with any qualifications for directors contained in the constitution of that company.

            (3) A person who is disqualified from being a director but who acts as a director, is a director for the purposes of a provision of this Act that imposes a duty or an obligation on a director of a company.

147.   Director’s consent required

            A person shall not be appointed a director of a company unless that person has consented in writing to be a director and certified that he or she is not disqualified from being appointed or holding office as a director of a company.

148.   Appointment of first and subsequent directors

            (1) A person named as a director in an application for registration or in an amalgamation proposal holds office as a director from the date of registration or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office as a director in accordance with this Act.

            (2) All subsequent directors of a company shall, unless the constitution of the company otherwise provides, be appointed by ordinary resolution.

149.   Court may appoint directors

            (1) If -

     (a)     there are no directors of a company, or the number of directors is less than the quorum required for a meeting of the Board; and

     (b)     it is not possible or practicable to appoint directors in accordance with the company’s constitution -

a shareholder or creditor of the company may apply to the court to appoint one or more persons as directors of the company, and the court may make an appointment if it considers that it is in the interests of the company to do so.

            (2) An appointment may be made on such terms and conditions as the court considers appropriate.

150.   Appointment of directors to be voted on individually

            (1) Subject to the constitution of a company, the shareholders of that company may vote on a resolution to appoint a director of the company only if -

     (a)     the resolution is for the appointment of one director; or

     (b)     the resolution is a single resolution for the appointment of 2 or more persons as directors of the company and a separate resolution that it be so voted on has first been passed without a vote being cast against it.

            (2) A resolution moved in contravention of subsection (1) is void even though the moving of it was not objected to at the time.

            (3) Subsection (2) does not limit the operation of section 154.

            (4) No provision for the automatic reappointment of retiring directors in default of another appointment applies on the passing of a resolution in contravention of subsection (1).

            (5) Nothing in this section prevents the election of 2 or more directors by ballot or poll.

151.   Removal of directors

            (1) Notwithstanding anything in its constitution or in any agreement between it and a director, a director of a public company may be removed from office by an ordinary resolution passed at a meeting called for the purpose or for purposes that include the removal of a director.

            (2) Subject to the constitution of a company, a director of a private company may be removed from office by special resolution passed at a meeting called for the purpose or for purposes that include the removal of the director.

            (3) The notice of meeting shall state that the purpose or a purpose of the meeting is the removal of the director.

152.   Director ceasing to hold office

            (1) Subject to section 153, the office of director of a company shall be vacated if the person holding that office -

     (a)     resigns in accordance with subsection (2);

     (b)     is removed from office in accordance with this Act or the constitution of the company;

     (c)     becomes disqualified from being a director pursuant to section 146;

     (d)     dies; or

     (e)     otherwise vacates office in accordance with the constitution of the company.

            (2) A director of a company may resign office by signing a written notice of resignation and delivering it to the address for service of the company and such notice is effective when it is received at that address or at a later time specified in the notice.

            (3) Notwithstanding the vacation of office, a person who held office as a director remains liable under the provisions of this Act that impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director.

153.   Resignation of last remaining director

            (1) Notwithstanding section 152(1), where a company has only one director, that director may not resign office until that director has called a meeting of shareholders to receive notice of the resignation, and to appoint one or more new directors.

            (2) A notice of resignation given by the sole director of a company shall not take effect, notwithstanding its terms, until the date of the meeting of shareholders called in accordance with subsection (1).

154.   Validity of director’s acts

            The acts of a person as a director are valid even though -

     (a)     the person’s appointment was defective; or

     (b)     the person is not qualified for appointment.

155.   Notice of change of directors and secretary

            (1) The Board of a company shall ensure that notice in the prescribed form of -

     (a)     a change in the directors or the secretary of a company; or

     (b)     a change in the name or the residential address or other particulars of a director or secretary of a company, is delivered to the Registrar for registration.

            (2) A notice under subsection (1) shall -

     (a)     specify the date of the change;

     (b)     include the full name and residential address of every person who is a director or secretary of the company from the date of the notice;

     (c)     in the case of the appointment of a new director or secretary, have attached the form of consent and certificate required pursuant to section 147; and

     (d)     be delivered to the Registrar within 20 working days of -

           (i)       the change occurring, in the case of the appointment or resignation of a director or secretary, or

          (ii)       the company first becoming aware of the change, in the case of the death of a director or secretary or a change in the name or residential address of a director or secretary.

            (3) If the Board of a company fails to comply with this section, every director and the secretary of the company shall be guilty of an offence and liable to the penalty set out in section 492(2).

156.   Proceedings of board

            Subject to the constitution of a company, the provisions set out in the Fourth Schedule govern the proceedings of the Board of a company.

157.   Remuneration, loans and other benefits

            (1) Subject to subsections (5) to (9), unless otherwise provided by the constitution -

     (a)     the company by ordinary resolution shall approve the remuneration of the directors and any benefits payable to the directors including any compensation for loss of employment of a director or former director;

     (b)     the Board may determine the terms of any service contract with a managing director or other executive director; and

     (c)     the directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any Board meetings of the company or in connection with the business of the company.

            (2) Subject to subsections (3) and (4), the constitution may provide that the Board, instead of the general meeting of a company, may approve -

     (a)     the payment of remuneration or the provision of other benefits to a director; or

     (b)     the payment by a company to a director or former director of compensation for loss of office, if the Board considers it is fair to the company.

            (3) In any case coming under subsection (2) the Board shall ensure that forthwith after authorising the making of the payment or the provision of the benefit as the case may be, particulars of the payment or benefit are entered in the interests register if the company has one, and in the minutes of directors’ meetings.

            (4) Where a payment is made or other benefit provided to which subsection (2) applies shareholders who consider that the payment was not fair to the company and who hold between them not less than 10 per cent of the company’s voting share capital may within one month of the date on which the existence of the payment was first made known to the shareholders (whether through the annual report, production of the interests register to a shareholders’ meeting or otherwise) require the directors to call a general meeting to approve the payment by way of ordinary resolution and to the extent to which the payment is not approved by ordinary resolution, it shall constitute a debt payable by the director to the company.

            (5) Subject to subsection (6) and section 247 a company shall not -

     (a)     make a loan to a director of the company; or

     (b)     enter into any guarantee or provide any security in connection with a loan made by any person to a director of the company.

            (6) Subsection (5) shall not prevent a company from-

     (a)     making a loan to a related company, or entering into a guarantee or providing security in connection with a loan made by any person to a related company;

     (b)     making a loan to a director who is engaged in the salaried employment of the company or its holding company, in accordance with a scheme for the making of loans to employees of the company which is approved by the general meeting of the company in so far as its application to directors is concerned;

     (c)     making a loan in respect of a director who holds salaried employment under the company or in a holding company or subsidiary of the company;

     (d)     providing a director with funds to meet expenditure incurred or to be incurred by him for the purpose of the company or for the purpose of enabling him to perform his duties as an officer of the company; or

     (e)     making a loan in the ordinary course of the business of lending money, where that business is carried on by the company.

            (7) Where a loan is made in contravention of subsection (5) the loan shall be voidable at the option of the company and the loan shall be immediately repayable upon being avoided by the company, notwithstanding the terms of any agreement relating to the loan.

            (8) Where a transaction other than a loan to a director is entered into by a company in contravention of subsection (5) -

     (a)     the director shall be liable to indemnify the company for any loss or damage resulting from the transaction; and

     (b)     the transaction shall be voidable at the option of the company unless -

           (i)       the company has been indemnified under paragraph (a) for any loss or damage suffered by it, or

          (ii)       any rights acquired by a person other than the director in good faith and for value, without actual notice of the circumstances giving rise to the breach of this section, would be affected by its avoidance.

            (9) If a company fails to comply with subsection (5) -

     (a)     the company shall be guilty of an offence and liable to the penalty set out in section 492(2); and

     (b)     every director of the company who authorises or permits the company to enter into the relevant transaction shall be guilty of an offence and liable to the penalty set out in section 493(2).

158.   Standard of care and civil liability of officers

            (1) Every officer of a company shall exercise -

     (a)     the powers and discharge the duties of his office honestly, in good faith and in the best interests of the company; and

     (b)     the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

            (2) Where a director of a public company also holds office as an executive the director shall exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that position would exercise.

            (3) Without limiting any liability of a director under section 130, where an officer commits a breach of duties under this Part -

     (a)     the officer and every person who knowingly participated in the breach shall be liable to compensate the company for any loss it suffers as a result of the breach;

     (b)     the officer shall be liable to account to the company for any profit made by the officer as a result of such breach; and

     (c)     any contract or other transaction entered into between the officer and the company in breach of those duties may be rescinded by the company.

159.   Indemnity and insurance

            (1) Except as provided in this section, a company shall not indemnify, or directly or indirectly effect insurance for, an officer or employee of the company or a related company in respect of -

     (a)     liability for any act or omission in his capacity as an officer or employee; or

     (b)     costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability.

            (2) An indemnity given in breach of this section is void.

            (3) A company may, unless its constitution provides otherwise, indemnify an officer or employee of the company or a related company for any costs incurred by him in any proceedings -

     (a)     that relate to liability for any act or omission in his capacity as an officer or employee; and

     (b)     in which judgment is given in his favour, or in which he is acquitted, or which is discontinued or in which he is granted relief under section 517, or where proceedings are threatened and such threatened action is abandoned or not pursued.

            (4) A company, unless its constitution provides otherwise, may indemnify an officer or employee of the company or a related company in respect of -

     (a)     liability to any person other than the company or a related company for any act or omission in his capacity as an officer or employee; or

     (b)     costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability, not being criminal liability or liability for conduct involving a reckless disregard of the interests of the company or a liability under section 160 or liability in respect of a breach, in the case of an officer, of the duty specified in section 130(1)(c).

            (5) A company, unless its constitution provides otherwise, and with the prior approval of the Board, may effect insurance for an officer or employee of the company or a related company in respect of-

     (a)     liability, not being criminal liability, for any act or omission in his capacity as an officer or employee;

     (b)     costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability; or

     (c)     costs incurred by that officer or employee in defending any criminal proceedings-

           (i)       that have been brought against the officer or employee in relation to any act or omission in that person’s capacity as an officer or employee, and

          (ii)       in which that person is acquitted.

            (6) The Board of a company shall ensure that particulars of any indemnity given to, or insurance effected for, any officer or employee of the company or a related company are forthwith entered in the interests register, if the company has one, or otherwise in the minutes of the directors’ meeting.

            (7) Where insurance is effected for an officer or employee of a company or a related company and the provisions of either subsection (5) or subsection (6) have not been complied with, the officer or employee is personally liable to the company for the cost of effecting the insurance except to the extent that the officer or employee proves that it was fair to the company at the time the insurance was effected.

            (8) In this section -

            "effect insurance" includes pay, whether directly or indirectly, the costs of the insurance;

            "employee" includes a former employee;

            "indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and "indemnity" has a corresponding meaning; and

            "officer" includes a former officer.

160.   Duty of directors on insolvency

            A director of a company who is knowingly party to the contracting of a debt by the company and had, at the time the debt was contracted, no reasonable or probable expectation, that the company would be able to pay the debt, shall, on the application of the liquidator or of the creditor concerned in the winding up of the company, be liable for the whole or any part of any loss suffered by the creditor to whom the debt was incurred.

161.   Secretary

            (1) Every company other than a close company shall have one or more secretaries each of whom shall, subject to subsection (6), be a natural person who has reached the age of majority and who shall ordinarily be resident in Botswana.

            (2) No person shall be appointed as a secretary of a company unless that person has -

     (a)     in the prescribed form consented to be a secretary; and

     (b)     the qualifications prescribed in section 162.

            (3) A person named as a secretary of the company in an application for incorporation or in an amalgamation proposal shall hold office as a secretary from the date of the incorporation of the company or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office in accordance with this Act or the constitution of the company.

            (4) Unless the constitution of the company otherwise provides, the Board may appoint or remove a secretary of the company.

            (5) The office of the secretary shall not be left vacant for more than three months at any time.

            (6) A firm or corporation may be appointed as secretary provided that -

     (a)     at least one member of the firm or one director of the corporation is ordinarily resident in Botswana and accepts responsibility for the work of the firm or corporation as secretary;

     (b)     the member of the firm or director of the corporation who accepts responsibility for the work of the firm or corporation as secretary under paragraph (a) is qualified to act as a secretary under section 162; and

     (c)     the names and business addresses of all partners or directors of the firm or corporation for the time being shall be provided on the request of the Registrar or any person dealing with the company.

162.   Qualifications of Company Secretary

            (1) The following persons shall not be qualified to be appointed and shall not act as secretary of a company-

     (a)     a body corporate, except in accordance with section 161(6);

     (b)     an undischarged bankrupt;

     (c)     a person who is the sole director of the company; or

     (d)     an auditor of the company.

            (2) Subject to subsection (3), it shall be the duty of the directors of a company to take all reasonable steps to ensure that the secretary of the company is a person who appears to them to have the requisite knowledge and experience to discharge the functions of secretary of the company and such qualifications, if any, as may be prescribed under subsection (3) and by Regulations made under the Act.

            (3) The secretary of a public company and non-exempt private company shall be -

     (a)     either a qualified auditor, a member of the Botswana Institute of Accountants, a member of the Southern African Institute of Chartered Secretaries and Administrators, or a legal practitioner; or

     (b)     a member of a professional association of company secretaries approved by the Minister under subsection (2).

            (4) The Minister may, for the purposes of subsection (3)(b), approve an association of company secretaries and notify such approval by publication in the Gazette.

163.   Duties of Company Secretary

            For the purposes of this section, the duties of a company secretary are -

     (a)     to be responsible to the Board of the company for the preparation of all returns required to be filed with the Registrar of Companies including those under -

           (i)       section 34 for the change of name,

          (ii)       sections 43(4) and 175 for the alteration of the constitution,

          (iii)       section 50 for the issue of shares,

         (iv)       section 125 for registration of particulars of charges,

          (v)       section 53(2) for the certificate regarding shares issued for consideration other than cash,

         (vi)       section 55 for the notice of call and of increase in stated capital,

        (vii)       section 155 for the notice of change of directors and secretary,

        (viii)       section 184(2) for the notice of change of registered office,

         (ix)       section 209 for the registration of financial statement, and

          (x)       section 217 for the annual return;

     (b)     to be responsible to the Board of the company for issuing all notices of meeting and responding to all enquiries in relation to notices of meetings;

     (c)     attending meetings of directors and general meetings of shareholders and keeping minutes of those meetings and together with the Chairman of Directors, signing the minutes as a true and correct record;

     (d) to be responsible to the Board of directors for maintaining the register of shareholders, debenture holders, directors and secretaries, substantial shareholders and charges;

     (e)     ensuring, together with the directors, that the company keeps accounting records pursuant to sections 205 to 208 and that annual financial statements are prepared and presented at the Annual Meeting; and

     (f)      to be responsible to the Board of directors for maintaining an adequate system of record keeping in relation to the correspondence, affairs and activities of the company.