Definition of an Alternate Director in terms of The Companies Act
An Alternate Director is defined in Section 1 of the Companies Act 71 of 2008 (“Companies Act”) as a person elected or appointed to serve, as the occasion requires, as a member of the board of a company in substitution for a particular elected or appointed director of that company.
An Alternate Director is also included in the definition of a Director in terms of Section 1 of the Companies Act. A “Director” is defined as a member of the board of a company, as contemplated in section 66, or an alternate director of a company, and includes any person occupying the position of a director or alternate director, by whatever name designated.
Duties and responsibilities of an Alternate Director
Based on the definitions provided in the Companies Act, it is clear that an Alternate Director is appointed as an independent director of the company and will, therefore, have the same duties and responsibilities as any appointed director of the company.
The Alternate Director may, however, only act in the absence of the Director to whom they are appointed as an alternative. An Alternate Director is entitled to attend and vote at meetings in the absence of the Director to whom he is an alternative, if that Director could not be present personally or electronically.
Appointing an Alternate Director
Alternate Directors are often appointed during periods of absence or incapacity of a Director.
The same procedures would apply when appointing an Alternate Director as with the appointment of a Director. The Alternate Director must deliver to the company a signed consent to act as Director form. The Companies and Intellectual Property Commission (“CIPC”) need to be notified of the appointment and the appointment is required to be entered into the registers of the company.
It is important to note that the Alternate Director is not appointed as a proxy and should, therefore, act in the best interest of the company as though he were the appointed Director, being subject to all of the fiduciary duties and requirements in terms of the Companies Act and the Common Law.
When the Director in whose absence the Alternate Director acts, resigns, the Alternative Director’s appointment will automatically cease, and the CIPC require to be notified accordingly.
Lindy Basson and Telana Snyman
Corporate Statutory Department, Johannesburg