Question

Question 1 Please provide concise answers to the following questions What are the major types of directors a company can have? i How are they directors appointed? i What does the Corporations Act (2001) provide in relation to how directors can be paid or remunerated?

Answer 1

i) There are two major types of directors:

• Inside director - A director who has a connection to the company such as being an employee. This also includes Executive directors who are involved in day-to-day operations of the company.
• Independent director - A director who has no material relationship with the company apart from sitting as a board of director. This includes non-executive directors who have no role in day-to-day operations of the company.

ii) The directors are appointed by the Shareholders or the current board controls adding board members to its own rank.

• Company shareholders can vote and appoint a director with a resolution passed at a general meeting of a public company
• Directors can appoint other directors. "The company must confirm the appointment by resolution within 2 months after the appointment is made"
• Alternate director - A director can appoint an alternate to exercise some or all of director's powers. Other directors must approve this appointment. Appointing director can terminate alternate's appointment an

III) The directors are paid in two ways - Salaries and Fees for serving on the board. Executive directors are paid using both mechanisma and independent directors are paid a fees for serving on the board. As per Section 300A of Corporations Act 2001, all listed companies must present to shareholders at annual general meeting a remuneration report. The report contains policies at arriving at methods to calculate board member remuneration.