A director is empowered by law to oversee all aspects of the day-to-day running of the company and to exercise all powers that do not specifically require a shareholders’ resolution at a general meeting in accordance with the articles of association or the Companies Act.
Every public company must have at least two directors, whilst the memorandum and articles of association of a private company typically lay down the minimum and maximum number of directors that the company can appoint, with the minimum being one.
Directors are appointed by the shareholders during a general meeting, for a period of time. A company can remove a director before their period of time in office has expired by passing an ordinary resolution at a general meeting of the company.
Any person who is 18 years of age or older, or minors who are 16 years of age and have been emancipated to trade, can be appointed as director. There are no restrictions on the nationality and residence of the directors of a Maltese company.
Duties and Responsibilities
First and foremost, the director shall promote the well-being of the company and in the carrying out of his role, shall act honestly and in good faith, in the company’s best interest. The interests of the director should therefore never interfere with the interests of the company.
A director is expected to exercise the degree of care, diligence and skill which would be exercised by a reasonably diligent person having both the knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions.
The director shall not use any property, information or opportunity of the company for their own or anyone else’s benefit, nor obtain a benefit in any other way in connection with the exercise of their powers, except with the consent of the company. Directors should therefore not place themselves in a position where there is a conflict between their duties to the company and their own personal interest or the interest of others.
In addition to these general duties, directors are also required to fulfil a number of administrative duties such as duties relating to the keeping of statutory registers and minute books and duties relating to the filing of returns and documents. There are also duties relating to the board and general meetings, as well as the duties relating to record-keeping and financial statements, such as the keeping of mandatory trade books, the profit and loss account and the balance sheet.
Liabilities of Directors
The personal liability in damages of any director for breach of duty is joint and several, provided that where a particular duty has been entrusted to one or more directors, only such directors shall be liable in damages.
A director shall not be liable for the acts of his co-directors if he proves that he did not know of the breach of duty before or at the time of its occurrence and that on becoming aware of it after its occurrence he signified forthwith to the co-directors his dissent in writing; or that, knowing that the co-directors intended to commit a breach of duty, he took all reasonable steps to prevent it.