Company Directors versus Managing Directors
A managing director or chief executive officer is appointed and generally reports to a company's board of directors. By comparison, a company director is a member of a board that serves as the governing body for an organisation. Typically, shareholders of a corporation elect or appoint board members. Both positions are involved in overseeing and directing the day-to-day operations and business of an organisation. They play an influential role in setting the tone and direction of the organisation, as well as insuring its success.
Roles and Responsibilities
Managing directors and company directors are bound by The Companies Act, 2006 and must consider the social impacts of doing business. For example, they must consider how their decisions will affect the environment. Directors must also consider how decisions impact a company's stakeholders, including its suppliers and employees. Although both positions play an important role in setting the direction of an organisation and making strategic decisions on day-to-day operations, how managing and company directors behave and are selected differ.
A managing director may also be known as a chief executive or the chief executive officer (CEO). The position represents the highest ranking corporate or executive officer in a company. They are in charge of the total management of an organisation. A managing director reports directly to a board of directors.
The responsibilities of a managing director are typically established by an organisation's board of directors. They may also be set by another authority, such as a service contract or a resolution made by the board of directors. Responsibilities may also depend on an individual organisation's legal structure and size. For example, in a small business a managing director may be responsible for hiring and budgeting.
A managing director acts as a director, decision maker, manager, executor and leader for a company. In terms of decision making, their actions revolve around making decisions on high-level policy and strategy. In a managing director's role as manager, they are responsible for overseeing the day-to-day operations of an organisation. As a leader, a managing director advises the board of directors and helps to drive change within a company. They may also act as a communicator, whether with external entities such as the media or with internal stakeholders such as employees.
Company directors are accountable to shareholders and report to shareholders on how a company is achieving the objects as defined in its memorandum and articles of association. Reporting is typically done through an annual report. Like a managing director, a company director is responsible for running the day-to-day affairs of an organisation. Unlike a managing director, company directors work as a collective and do not make decisions as individuals. With the exception of the board's chairman, company directors are also less publicly recognised or visible than a managing director or CEO.
Company directors are elected or appointed to an organisation's board of directors. The role of a board is to ensure the company's success by directing the organisation's businesses. Company directors are also responsible for meeting the interests of shareholders. They are generally responsible for a company's business and financial issues, as well as making decisions related to any challenges or issues that arise related to corporate governance, ethical issues, and corporate social responsibility. A board may also be used as an approval body within the organisation.
The powers of individual company directors are set by the board and the company's constitution. Company directors must act within these parameters, as well as fulfil a number of additional duties that are set out in common law and The Companies Act, 2006. These duties include promoting the success of the organisation, exercise reasonable care, making individual judgements, avoid conflicts of interest, reject benefits from third parties, and declare any interests in proposed transactions.