You’ve registered a business and you have taken the title “Director” – congratulations! But do you fully understand what that means?
Carrying the title “Director” involves a lot more than just being the owner and manager of your business. A company is a separate legal entity according to the laws of South Africa. This means that the company is subject to specific rules and regulations. The role of a director involves running the business in such a way that it complies with these rules and regulations.
As a director, you are required to do things in such a way that you always operate in the best interests of the business and its shareholders. This applies even when you are the only shareholder!
As such, there are a number of standard duties and responsibilities that every director has to adhere to, summarised here:
- A director must never knowingly cause harm to the company
- A director must not use their position to benefit themselves over and above the company and company shareholders
- A director is required to perform the function of a director in good faith for a proper purpose, always acting in the best interests of the company and with a degree of care, skill and diligence as can be expected of a person suitable for the role
- A director needs to fully understand the purpose and processes of the business
- A director needs to have at least a basic understanding of all roles and responsibilities within the business – not necessarily how to do the job, but why it exists and how it fits into the organisation
- A director is responsible for ensuring that a company is run legally and ethically
- A director is responsible for keeping the business compliant with SARS – regardless of whether or not he/she is the person submitting returns
- A director is responsible for keeping the business compliant with the Department of Labour (UIF, COID and the Basic Conditions of Employment) – regardless of whether or not he/she is involved with HR or not
- A director is responsible for ensuring that the business is compliant with all the Acts related to businesses: The Companies Act, Protection of Personal Information Act, Promotion of Access to Information Act, Basic Conditions of Employment Act, the Taxation Act, the VAT Act, the Consumer Protection Act and the National Credit Act to name a few.
- A director carries personal liability for all legal ramifications of a company breaking a law
- A director carries personal liability for any private or public damages and compensation that arise out of a director’s management decision
This is a long list of duties and responsibilities and can feel overwhelming for a new business owner, but its not as bad as it seems! If you conduct yourself responsibly and ethically at all times and ensure that you establish a culture of legality and ethics in your company, then you’re halfway there already. To meet the rest of the requirements, all you need to do is some reading – all the Acts and guides on how to implement them are freely available online.
But if you don’t have the time to wade through it all, ask an expert to come in and give you a crash course on what you need to know and what you need to do.