By Nathalie Matta
Managers and Directors share similar responsibilities in organizations, but each performs different tasks that help a company operate. Knowing the differences between the roles can help you understand why each is important. This article will guide all the DMCC Companies to know more about the role and duties of the Director and Manager in accordance with DMCC Company’s Regulations and Officer Rules.
Director
- A. Who can be a Director:
A company must have at least one Director and this Director must be a natural person unless otherwise agreed by the Registrar in exceptional circumstances. In addition to that, according to section 9 of DMCC Company’s regulations that came into effect on January 2022, a Director must have certain criteria to be accepted such as: the Director has to be above 21 years old, should not have been convicted of a criminal offence, etc.
- B. The role of a Director:
The Directors are appointed by the shareholders to manage the Company’s day-to-day affairs. The Directors are effectively the agents of the Company. According to the Officer Rules of DMCC, the Director must implement the overall strategy, business activities and affairs of the Company on behalf of the shareholders. In addition to that the Directors are in charge of the Company’s decisions which should be for the benefit of the Company and its shareholders. The Directors are the ones who appoint the Managers and the secretary, and they make sure that they are fulfilling their duties.
- C. The duties / responsibilities of the Director:
This section tackles the general duties and obligations of the Director and the seven more specific duties which the Director must follow according to the DMCC Officer’s Rules.
- i. General Duties
Confidentiality. A Director can disclose the Company’s confidential information in a very delicate way and solely for the benefit of the Company.
Compliance with other applicable laws and regulations. The Director has a duty to make sure that the Company is complying with all the applicable laws, regulations, rules and policies such as environmental regulations, anti-corruption legislation, etc.
- ii. Specific Duties
Every Company has its own rules and regulations but there are six broad duties that the Director must follow.
— To act within the powers. The Director must act within the scope of the powers set out in the constitutional documents of the Company such as appointing/removing a Manager/secretary, borrowing funds, etc.
— To act lawfully. Every act and decision made by the Director must be done in a lawfully way and in a way that promote the success of the Company.
— To have independent judgment. The Director must not be influenced by others which means that all the decisions must be made independently and objectively.
— To act with reasonable care, skill, and diligence. The Director must use the same care, skill and diligence that would be used by a reasonable person who is in the same position.
— To avoid conflicts of interest. The Director must not have a direct or indirect interest which conflict or may possibly conflict with the interest of the Company. If a Director has a direct or indirect interest in a transaction or arrangement and the Director declares its interests in this transaction or arrangement, a conflict of interest will not arise, provided the Director complies with any actions set out by the other Directors or by the Shareholders (as the case may be) to mitigate such conflict.
— To not accept benefits. The Director must not accept benefits from third parties.
In the event where the Director fails to comply with any of the above-mentioned duties, he will be considered in a position of breaching his duties.
Manager
- A. Who can be a Manager:
According to the Officer Rules, a DMCC Company must have a Manager. Sometimes the Manager is referred to as the licence Manager since the Manager’s name appears on the commercial/trade Licence. In addition to that, as stated in section 55 of DMCC Company’s Regulations a person must meet certain criteria to be appointed as the Manager of the Company. The Manager must be a natural person, must be above 21 years old, should not have been convicted of a criminal offence, etc.
- B. The role of the Manager:
The role of the Manager may be specified in the constitutional documents of the DMCC entity but in general, the Manager helps the Director to manage the day-to-day operations of the entity.
- C. Duties/Responsibility of the Manager:
— To act within the powers. When appointing a Manager, the DMCC entity must choose a person who has sufficient experience and can commit to his duties that will apply regarding the nature and size of the DMCC Entity’s business. In addition to that the Manager must act in accordance with the powers granted to him/her.
— To act in accordance with the license. The Manager must operate with the permitted activities set out in the License.
— To deal with the employee. The Manager must deal with all the employment matters in a reasonable and fair way.
— To communicate with the Registrar. The Manager shall communicate with the DMCC Registrar regarding any issue or queries.
— To cooperate with the Directors. The Manager must cooperate and update the Directors on all the matters that they may impact their duties as Directors.
In the event where the Manager fails to comply with any of the above-mentioned duties, he will be considered in a position of breaching his duties.
Can a director also be a manager in DMCC?
Yes, a Company may appoint the same person to serve as Director and Manager, but the roles and obligations of each position remain independent and attached to the relevant position.
We hope that this article provided you with a clear understanding on the difference between these two positions.
If you have any queries on this topic, please do not hesitate to reach out to us on the following email: contact@legalboutique.ae
