CGF ARTICLES, OPINIONS & EDITORIALS

Time to insure your position as the net broadens for ‘Prescribed Officers’ (2011-10-31)

February 19, 2015  2834  2834   

-- is the fact that the personal liability as attached to directors and prescribed officers of any type of business operation, is unparallel to years gone by.  Most often there is big money attached to these posts and being directors and prescribed officers is serious business.  It's certainly not meant for sissies and its impacts, particularly when things go wrong, can be devastating.

Following the introduction of the Act, employees -- other than directors -- may well want to establish with their HR departments whether or not their job-related functions fall within the ambit of a prescribed officer.  In the Act, Section 66 (10), refers to a “prescribed officer” as “a person who, within the company, performs any function that has been designated by the Minister in terms of Section 66 (10)”.  In this section, it states that “the Minister may make Regulations designating any specific function or functions within a company to constitute a prescribed office for the purposes of this Act.”  Moreover, Regulation 38 of the Act elaborates further, saying that a person is considered to be a prescribed officer -- despite not being a director -- if they exercise (or regularly participate to a material degree in) general executive control over and management of the business, or a significant portion of the business and activities of the company.  This applies to a prescribed officer irrespective of any particular title given by the company to that prescribed officer.  Furthermore, in Regulation 58 (1), it says that: “in this Regulation, a reference to directors, proposed directors or prescribed officers of a company includes any person holding one or more material contracts to perform any executive function for the company.”