Defining Directorship

20 Pages Posted: 24 Oct 2010 Last revised: 1 Nov 2010

See all articles by Susan Watson

Susan Watson

University of Auckland Faculty of Law

Chris Noonan

University of Auckland - Faculty of Law

Date Written: September 21, 2010

Abstract

This article is an attempt to define directorship. Identifying, and providing clarity on precisely what directorship is, may contribute in some way to the debate on the role of directors and boards in corporate governance. The article begins with a discussion of the historical development of modern company law and the place of boards of directors within that development. It is apparent that the concentration of control in a board or equivalent has always been a key aspect of corporations’ law with directorship being regarded as akin to an office. Despite the genesis of the 1856 and 1862 Acts appearing to be in the principles of partnership law, the courts of the late Nineteenth Century increasingly drew on corporations’ law principles when developing modern company law. This integration of corporations’ law principles culminated in Salomon v Salomon where it was upheld that a modern company is a species of corporation. A consequence of that importation of corporations’ law was the development of an expectation by judges that companies have directors with occupation of the position of director rather than appointment to the position by the shareholders becoming the key aspect of directorship. The next section of the article focuses on what it means to be occupying the position of director drawing on case law around de facto directors; persons who are not appointed to the position of director but who are deemed to be directors nevertheless. It is concluded that being a corporate agent or being delegated decision making powers or controlling decision making by the board are not enough on their own to make someone a director. It is acting on an equal footing with directors as part of the board that is the key indicia of directorship.

Keywords: corporate, corporate governance, directors, corporate law

Suggested Citation

Watson, Susan Mary and Noonan, Chris, Defining Directorship (September 21, 2010). Australian Journal of Corporate Law, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1695796

Susan Mary Watson (Contact Author)

University of Auckland Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

Chris Noonan

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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