154 SECRETARIAL PRACTICE

Relief from
Liability.

Alternate
Directors.

writing, or by word of mouth, is expressly provided for by .
s. 29 of the Act. The effect of this provision is to place a

company in the same position as an individual in regard

to the formalities to be observed. As to Bills of Exchange

and Promissory Notes, see s. 30.

If a director, manager, officer or auditor of a company is
sued for negligence, default, breach of duty or breach of
trust, the Court may relieve him, wholly or in part, from
liability therefor on such terms as it thinks fit if it appears
that the party charged has acted honestly and reasonably, and
that having regard to all the circumstances of the case, he
ought fairly to be excused (s. 372).

The new law incorporating the Companies Act, 1928,
contains provisions specially affecting the position of directors
and it is desirable to bear in mind the steps to be taken to
govern the appointment’ of alternate directors and their
duties and responsibilities when so appointed.

The authority to appoint an alternate is derived from the
articles of association, and most modern articles give a director
power to appoint’ either any other director or some other
person to act in his place, either conditional on the director's
absence abroad or as is now more usual in any circumstances.
[t is important for the article to define clearly the position of
the alternate. Where the articles provide that a director
shall possess a share qualification the article empowering the
appointment of an alternate should state whether the alternate

shall possess such qualification. The article should also define
whether the director’s remuneration is to be paid to the
director himself or to his alternate: presumably in the absence
of any specific authority in the articles or from the director
the remuneration should be sent to the director himself, who
may have made his own arrangement with his alternate as to
payment for services. It is usual to make the appointment
of an alternate subject to the approval of the remaining
directors, and the phrasing should be either “subject to the
approval of all the remaining directors of the company who
may for the time being be resident in Great Britain,” or
“subject to the approval of the majority of the other directors
of the company,” and the articles should provide that such
approval may be given either in writing or at a properly
convened meetingrof the directors.

The minimum of two directors which s. 1 39 of the Companies
Act, 1929, requires for a public company would not be satisfied
by one director and his alternate, because the latter is a sub-
stitute for the former. - For the same reason it is considered
that the requirement in s. 140 as to filing with the Registrar