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Part I.
Chap. 3.

Directors.

The Articles of Association.

(i) To appoint agents and attorneys for the company in New Zealand and in the United Kingdom, and in any of the other colonies, or in any foreign country, with such powers (including the power to sub-delegate) as may be thought fit, and to provide, if necessary, for the management of the affairs of the company outside the colony of New Zealand by any other company or corporation or any firm or person.

(j) To enter into any agreement with any company, firm or person carrying on any business, for mutual concessions, or for any joint working or combination, or for any pooling of business or profits that may seem desirable, and to carry the same into effect.

(k) To give, award, or allow any bonus, pension, gratuity, or compensation to any employee of the company or his widow or children that may appear to the directors just or proper, whether such employee, his widow or children, have or have not a legal claim upon the company; and to give to any officer, servant, agent, or other person acting on behalf or for the benefit of the company, whether in the employ of the company or not, a commission on or share of the profits of any particular business or transaction, or any bonus or a share in the general profits of the company, and any such bonus, pension, gratuity, compensation, commission, or share of profits shall be treated as part of the working expenses of the company, and may be paid in cash, or by shares partly or fully paid, or debentures.

(1) To commence and carry on or defend, and to abandon and compromise any legal proceedings whatsoever by or against the company or its officers or otherwise concerning the affairs of the company, including proceedings in bankruptcy on behalf of the company, or to refer any claims or demands by or against the company to arbitration, and to observe and perform the awards, and to accept compositions from or to compound with or give time to any debtor or contributory owing money or alleged to owe money to the company.

(m) To give receipts, releases, and discharges on behalf of the company.

(n) To invest and deal with any of the moneys of the company not immediately required for the purposes of its business or objects, in advances upon such shares and securities, or in the purchase of such shares and properties, and in such manner as they may think fit (but so that no moneys of the company shall be applied in the purchase of or by way of loan upon its own shares), and from time to time to vary any such investment or investments, or realise the amount invested therein.

(0) To give indemnities to any director or other person whether a member of the company or not who has undertaken or is about to undertake any liability on behalf of or for the benefit of the company, and to secure such director or other person against loss by giving him a mortgage or charge upon the whole or any of the assets or property of the company, present or future, by way of security; and any such mortgage or charge may contain a power of sale, and such other powers, covenants, and provisions as may be agreed upon.

(p) To appoint any person or persons, company or corporation, to acquire, accept, and hold in trust for the company any property or assets

The Articles of Association.

Chap. 3.

of the company or in which it may be interested, or may desire to acquire Part I. or control, and for any other purposes, and to execute and do all such deeds and things as may be requisite in relation to any such trust and to provide for the remuneration of such trustee or trustees.

See Art. 100 of Table A.

Disqualification of Directors.

104. The office of a director shall, ipso facto, be vacated

(1) If he accepts or holds any other office or place of profit under the company (except that of managing director).

(2) If he becomes bankrupt or insolvent or compounds with his creditors or suspends payment.

(3) If he become of unsound mind or be found a lunatic.

(4) If he be convicted of an indictable offence.

(5) If he ceases to hold the necessary qualification in shares or stock or does not acquire the same within two months after election or appointment.

Two months is the period fixed by Sec. 71 of 1903 if the regulations do not fix a shorter period.

(6) If he absents himself from the meetings of directors for a period of three months or if he does not attend at least one half of the meetings of directors held in each year without special leave of absence from the other directors.

As to voluntary and involuntary absence, see In re London and Northern Bank, 17 T.L R. 188.

(7) If he shall give the company notice in writing that he resigns his office.

(8) If he is concerned in or participates in the profits of any contract with the company or work done for the company; but no director shall vacate his office by reason of his being a member of any company which has entered into contracts with or has done any work for the company of which he is a director. Nevertheless, he shall not vote in respect of such contract or work, and if he shall so vote his vote shall not be counted. (9) If he is requested in writing by all his co-directors to resign. This paragraph is not usual.

If it is desired to give directors the power of dealing with the company the following clause may be adopted :

A director shall not be disqualified by his office from entering into contracts, arrangements, or dealings with the company, either as vendor, purchaser, or otherwise, nor shall any contract, arrangement, or dealing with the company be avoided by reason of the fact that any director is interested therein, nor shall a director be liable to account to the company for any profit arising out of any contract, arrangement, or dealing with the company by reason of such director being a party to or interested in or deriving profit from any such contract, arrangement, or dealing, and being at the same time a director of the company and in a fiduciary relation thereto: Provided that such director discloses to a meeting of

Directors.

Part I.
Chap. 3.

Directors.

The Articles of Association.

directors his interest in such contract, arrangement, or dealing at or before the time when the same is determined upon, or, if his interest is subsequently acquired, provided that he on the first occasion possible discloses to a meeting of directors the fact that he has acquired such interest. But no director shall [except in respect of the contract referred to in Art. 3 hereof or any matter arising thereout] vote as a director in regard to any contract, arrangement, or dealing in which he is interested or upon any matter arising thereout, or if he shall do so his vote shall not be counted. See Arts. 77 and 79 of Table A.

105. The continuing directors may act notwithstanding any vacancy in their body [but if their number falls below the minimum fixed by Art. 99 hereof, the directors shall not, except for the purpose of filling vacancies, act so long as their number is below such minimum].

See Art. 80 of Table A.

Rotation of Directors.

106. At the ordinary meeting to be held next after the statutory meeting the whole of the directors shall retire from office; and at the ordinary meeting in every subsequent year one-third of the directors for the time being, or if their number is not a multiple of three, then the number nearest to one-third shall retire from office. A retiring director shall hold office until the dissolution of the meeting at which his successor is elected.

See Art. 81 of Table A.

The following form is also usual :

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At the ordinary meeting in the year 190 and at the ordinary meeting in every subsequent year, one-third of the directors for the time being, or if their number is not a multiple of three, then the number nearest to one-third shall retire from office.

107. The one-third or other nearest number to retire during the first and second years ensuing on the statutory meeting of the company shall, unless the directors agree among themselves, be determined by lot. In every subsequent year the one-third or other nearest number who have been longest in office shall retire.

See Art. 82 of Table A.

The following form is also usual:

The one-third or other nearest number to retire in the years 190 and 190 shall, unless the directors agree among themselves, be determined by lot. In every subsequent year the one-third or other nearest number who have been longest in office shall retire. And upon all occasions where several directors have been in office an equal length of time, and some or one only of such directors ought to retire, the directors or director to retire shall, in default of agreement, be determined by lot. For the purposes of retirement by rotation, a director's term of office shall be computed from his most recent election or appointment.

108. A retiring director shall be eligible for re-appointment or reelection.

See Art. 83 of Table A.

The Articles of Association.

109. The company at the general meeting at which any directors Part I. retire in manner aforesaid shall fill up the vacated offices, and any other Chap. 3. offices which may then be vacated, by electing the necessary number of persons, unless the company shall determine to reduce the number of directors.

See Art. 84 of Table A.

110. If at any meeting at which an election of directors ought to take place the places of the vacating directors are not filled up, the meeting shall stand adjourned till the same day in the next week at the same time and place; and if at such adjourned meeting the places of the vacating directors are not filled up the vacating directors, or such of them as have not had their places filled up, shall (if willing) continue in office until the ordinary meeting in next year, and so on from time to time until their places are filled up.

See Art. 85 of Table A.

111. The company may from time to time in general meeting fix the number of directors within the limits prescribed by Art. 99 hereof, and may from time to time, within such limits, increase or reduce the number of directors, and may also determine in what rotation such increased or reduced number is to go out of office. The number of directors in office at the statutory meeting of the company shall continue to be the due number until otherwise determined.

See Art. 86 of Table A.

112. Any casual vacancy occurring in the board of directors may be filled up by the directors, but any person so chosen shall retain his office so long only as the vacating director would have retained the same if no vacancy had occurred.

See Art. 87 of Table A.

113. The company in general meeting may, by a special resolution, remove any director before the expiration of his period of office, and may, by an ordinary resolution, appoint another person in his stead. The person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed.

See Art. 87 of Table A.

114. No person other than a retiring director shall be eligible for election unless seven days' previous notice in writing shall have been given to the company of the intention of some member to propose such person, or unless the directors by resolution recommend such person for election, or unless the general meeting unanimously waives such notice or recommendation.

See Art. 88 of Table A.

115. Mr.

Managing Director.

shall be managing director of the company, and his appointment shall date from the day on which the company is entitled to commence business, and shall be for five years; and such

Directors.

Part I.
Chap. 3.

Directors.

The Articles of Association.

appointment shall continue from the end of the said five years unless and until determined by six months' previous notice in writing being given to him by the directors. His remuneration shall be a salary of £500 a year.

This article does not constitute a contract between the company and the managing director, and he cannot compel the company to give effect to it: Eley v. Positive Co., 1 Ex D. 20, 88; Browne v. La Trinidad, 37 C.D. 1. But if the directors recognise his position and he continues to act, the Article will be evidence of the terms of his engagement: Isaacs' case, 1892, 2 Ch. 158; Salisbury Jones's case, 1894, 3 Ch. 356.

The above form is applicable where a company takes over a business and the former proprietor continues to manage.

Where it is desired to give the directors power to select and appoint a managing director at a salary the following form is suitable :

The directors may from time to time appoint one or more of their body (or any other person) to be a managing director or managing directors of the company, either for a fixed term or otherwise, and may fix his or their remuneration either by way of salary or commission, or by giving a right to participation in the profits of the company, or by a combination of two or more of these modes, and the directors may from time to time remove or dismiss any managing director or directors and appoint another or others in his or their place or places. Any managing director if dismissed or removed by resolution of the directors shall have no right or claim to continue in office, and his only remedy against the company (if any) shall be in damages.

116. A managing director shall not, while he continues to hold that office, be liable to retire by rotation, and he shall not be taken into account in determining the rotation in which the other directors shall retire (except for the purpose of fixing the number to retire in each year), but he shall, subject to the provisions of any contract between him and the company, be subject to the same provisions as regards resignation, removal and disqualification as the other directors of the company, and if he shall cease to hold the office of director from any cause he shall ipso facto immediately cease to be a managing director.

117. The directors may from time to time entrust to and confer upon the managing director or managing directors such of the powers of the directors exercisable under the Articles as they think fit, and with and subject to such limitations and restrictions as to time and mode of exercise or otherwise as they may think expedient, and the directors may at any time withdraw, revoke, or vary the powers so conferred or any of them. But the directors shall not have authority to confer upon any managing director or directors the power to make calls, forfeit shares, borrow money, or issue debentures.

Persons dealing with a company and acting in good faith are entitled to assume that a managing director has all the power he purports to exercise if they are powers which under the Articles may be conferred upon him: Biggerstaff v. Rowatt's Wharf, Ltd., 1896, 2 Ch. 93.

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